The Internal Importance of ROI

To some, return on investment (ROI) may appear to have reached marketing buzzword status. However, despite the term’s widespread use in the current business lexicon, its importance cannot be understated — especially to marketing executives. While understanding and being able to measure ROI is of vital importance to external marketing efforts, it is just as important for internal communication and credibility. With all the financial turmoil that many companies are presently facing, it will be vitally important for marketers to exquisitely detail that marketing is a lifeblood investment for the enterprise rather than a costly excursion.

Without hard numbers to support requested marketing budgets, top management and boards of directors will be in no position to approve marketing outlays in today’s economic quagmire. Faced with declining sales, some companies cut marketing by a certain percentage across the board. That may be an easy way to cut budgets, but it is seldom the smart way. If, and that is a big if (see Turtles vs. Giraffes), you absolutely need to cut your marketing, concentrate on cutting out what isn’t working for you and preserve what is working well for the organization. The only way to know that is to have an ROI analysis in hand.

Getting a handle on ROI isn’t tough if you wire a system into your efforts through the entire sales and marketing funnel. However, that commitment must start at the top of the marketing chain of command. INC magazine recently had an article, Ten Myths About ROI, that should be helpful to those who have questions about the emphasis on ROI.

It’s Halloween, and the only thing that seems scary to me is the thought of CMOs or marketing executives trying to navigate their way to success – externally or internally – without having numbers that support their efforts.