Of course, there’s a simple answer to this question. However, I’ve been thinking long and hard about the ongoing discussion around the obsessiveness with the ROI metric (Les Binet, Peter Field et al). It’s in the textbooks, it’s drilled into us from an early marketer’s age and yet here I am debating whether it’s even worth it – I’m not the only one¹.

In its purest form, of course we would all like to see some kind of return on our investments. If you think personally, whether that’s investing our time and effort into relationships; or whether it’s the money we put aside for a rainy day; or when we have to make the decision about which mortgage, we take and over how long. In life, we try and make the better investments. Equally we accept that some things don’t warrant or expect a specific financial return – helping someone out, buying a new car, giving to charity. And we accept these losses for a more personal emotional return or a wider societal contribution. For the greater good or to feel good. We’re paying forward.

Does it mean we should forget about the ROI measure completely? I don’t think so. It’s an important measure for seeing whether the areas you invest in have an impact – good or bad – and giving you an indication of why. Especially in our complex B2B buyer world. But where we’ve seriously gone wrong* is to make it the only metric in town – and marketers have used it to justify their existence to the CEO and Board, so they all think it’s the right metric too: “Hey, let’s check your ROI dashboard again…” (followed by raised eyebrows).

Marketing needs to get serious about profit. To really understand where/how their business makes money. Where does high margin come from or not – overall, by deal, solution, product, sellers. Get into the detail of the sale process, types of sale and the profit made – be part of the sales and pricing discussion. What affects it – contract length, negotiation etc. Are you creating metrics such as Customer Lifetime Value that measure profit as well as revenue²? What is the market dynamic and how can you influence pricing strategies or deploy tactics in certain channels or stages of the buying cycle to improve conversion of higher value deals. Yes, marketing can help build brand value which helps generate some business but it needs to go further. The marketers who get to grips with this will challenge the business to do better; and will provide the insight and market knowledge to maximise opportunities (the most profitable ones!).

Like most execs in the organisation, the focus has to be sustainable revenue and profit over the long term. Using all 4Ps to achieve this – for example, how much have you tested the market around pricing, what do your customers pay competitors, how do you compare in customers’ minds in terms of value and performance? Equally not every X£$€ spent will achieve Y return and that’s okay. Otherwise, we’re not trying things, we’re not experimenting to see what works. As much as financial impact, we, as marketers, need to study longer term indicators such as customer lifetime value (CLTV), customer retention, NPS and I would argue the marketing department’s own reputation in the organisation (an Internal NPS). As well as managing the reputation of the organisation in wider society.

The debate isn’t actually about ROI vs Profit, it’s about keeping focused on how marketing really drives the business. Which is profit. Use ROI as an element of performance measurement but use it wisely.

*There are some great CMOs who’ve abandoned obsessing about this metric long ago! High five.

¹_{Marketing Week: https://www.marketingweek.com/ritson-triple-cooked-chips-marketing-budgets/}

_{²Magnus Consulting: https://magnusconsulting.co.uk/a-guide-to-marketing-effectiveness/}