Gary Vaynerchuk, who turns 40 this week, is one of the leading thought leaders in marketing today. Gary spoke at a wine marketing event I helped create several years ago for about 500 wine marketing professionals. It was an amazing experience to hang out with Gary and to spend some quiet time talking with him about the world of marketing.
Gary has famously said that when people ask about the ROI (return on investment) of marketing, he always asks them to describe the return on investment of their mother. In his special, provocative style, he is asking how can you put a value on the time, energy and involvement you spend on your brand. He compares measuring ROI to measuring the time you spend with your mother.
His comment is intentionally flippant, but there is a kernel of truth in the thought. Pick whatever metaphor you want, but marketing is seeding the future for your company. It is investing in building reputation, trust as well as awareness. If those things aren’t valuable to your business, then you must have an elixir that everyone wants and is willing to pay a premium price for because it solves every problem they have.
What Does Marketing Success Look Like?
- Why is it that we don’t question the number of sales calls a salesperson makes on a customer and the return on that investment?
- Why don’t we measure the effectiveness of a sales colleague spending a few thousand dollars to fly to visit a customer and take them out to lunch?
- Why don’t we challenge the tens of thousands of dollars we spend on trade shows?
- Why don’t we examine the value of elaborate sales CRM’s and the ROI on that spending?
- Why is it that we don’t talk about ROI in sales – just marketing?
- How can we separate a sales activity from a marketing activity? Where do you draw that line?
Why is marketing seen as the step-child? Marketing seems to get a bad rap for being impossible to measure, hard to understand and not linked to strategic goals. My argument is that if you don’t have a clear business strategy, you are going to waste money and have a poor return on lots of activities that you might do in your company.
If you don’t have an agreement for what success looks like for a sales or marketing activity, then, of course, your actions may be criticized and seen as a failure.
Marketing is easy to pick off and say, well you can’t prove that your ads, promotions or digital activities are providing us with sales. I’m convinced that part of the reasons that marketers do have difficulty in showing an ROI is that they don’t properly set up expectations for activity. It is so easy to forget what you agreed was your definition of success.
- If you run ads for your product, what is the agreement you have with your colleagues that demonstrate that the ads are successful and worth repeating?
- If you create a promotion with a partner, how will you measure that it was worth the time, effort and energy to do it again next year?
- If you invest in a new digital platform for your online front door, how will the management team assess the benefit derived from the effort?
- If you spend money on outbound marketing efforts like email campaigns, what is the success criteria that everyone agrees to make it worth repeating?
- If you triple the amount of money you spend creating fancier brochures, how will you determine that you have recouped the cost, and it was worthwhile?
If sales don’t grow, or they are flat or grow rapidly, how precisely can you attribute those results to marketing?
How Do You Measure Return?
There isn’t one answer, but the correct answer is that you and your company’s leadership have to agree on what success looks like for the money spent. Perhaps you have a one-page agreement that says, we will spend a certain amount of dollars in the fiscal year on five key marketing programs. The agreement outlines success and the metrics required to achieve it. You have to collaborate on what those metrics are for you and your organization. This contract with the company can help you align and get on the same page. It is better to do this upfront, then to wait until the year is over when the blame game may start.
As an example, you might say that your investment is marketing pays off if:
- You increase the number of qualified leads by 15%
- You increase the earned media exposure by 20% based on what space would cost if you paid for it as an ad
- You expand your direct reach to customers by increasing sign up for your corporate blog by 20% year over year
- You get a 35% open rate on your email campaigns and a 5% click through rate to get customers requesting either sample, literature or more information
- You grow your awareness of your brand as measured in an online survey comparing unaided awareness in one year compared to the prior year.
- You bring 100 targets to a live event where you get to spend five hours demonstrating your thought leadership in the industry
- You conduct market research for some key customers that convince at least several of them that they should buy from you based on the study’s finding.
Marketing activities open doors, but it is the role of sales to close the deal. The line between the opening and closing is thin and requires clear alignment and goal setting.
How are you succeeding at this task? I’d love to hear your thoughts in the comment section below.
Need help to create a contract with your management team? Let’s talk.
