The Truth and Myth of ROI

ROI, Return on Investment, is a term that gets thrown around a lot in many different contexts.  No more so than in the sales world.  As sales people part of what we are selling, regardless of the product, is the return the buyer can expect in exchange for their hard-earned dollars.  With cars, the ROI can be safety, image or reliability.  When we talk about ecommerce platforms it is talked about in terms of conversion, reduced cart abandonment, better SKU level reporting.  If you’re shopping for watches you want to know how durable, reliable and fashionable it is.

ROI is a tool salespeople and buyers both use as a way to justify a purchase. In some cases the calculation is clear enough for the lay person.  For example, the ROI for using an excavator instead of man power is more earth moved in less time by fewer people, fewer injuries and fewer broken shovels.  That’s easy.  In the Marketing Technology (Martech) sector the ROI calculation is a bit more complicated.

The truth about ROI is that it is similar to the old adage about beauty.  It is in the eye of the beholder.  Every department head, every CMO, every marketing analyst faces a unique set of challenges on a daily basis.  All of these challenges have their own dependencies such as existing infrastructure, operational process and procedures, decision making hierarchies and business requirements.  These dependencies make the definition of ROI different for every buyer.  Especially when it comes to Martech.  Any experienced marketer will tell you that marketing is both art and science.  In Martech we’d like to believe that we are providing marketers with the tools to automate, to analyze, to overcome the subjective but at the end of the day no one speaks to humans like another human.

The myth about ROI is that for each solution, platform or provider there is a single calculator that you can arm your sales team with that will resonate with everyone that they talk to.  Certainly there are cases where the financial calculation is as basic as a + b = c.  In marketing, where human interaction is nuanced and subjective, the calculation looks more accurately like,

Right Product + Right Words & Images / Impressions * Facebook = Revenue?

The Martech sector, Explorics included, is hard at work on a daily basis trying to solve for this by leveraging data.  Data tells a great story but at the end of the day it needs to be interpreted and acted on by a marketer.  This is why ROI calculation is not a one size fits all proposition.  This is also why Explorics is building plain English insights into our platform, to help make the data we present back to our clients actionable.

If you’ve made it through the first 409 words of this blog post you are probably saying, “Alright Hollis, get to the point, I’ve got shit to do.”  My point is this, when you start talking about ROI, stop being lazy.  It is our responsibility as client facing resources to be the subject matter experts.  To ask the right questions.  To get to the right level of detail.  THEN and only then should the term ROI come out of your mouth or show up in your deck.  Until you know more you’re assuming, and you know what happens when we ass-u-me.

Thanks for reading.