In the world of business and marketing, Return on Investment (ROI) has long been hailed as the holy grail of success metrics. But is this narrow focus on quantifiable returns truly serving brands and businesses in the long run? Let's explore why an obsession with ROI may well be holding your brand back from reaching its full potential. In this blog, Ruby Assembly’s Director Iolanthe Gabrie pulls no punches on why it’s basic to make decisions based on measurability alone.
The Pitfalls of ROI-Centric Thinking
ROI, at its core, is a lazy quantification of value. It reduces complex business processes and customer relationships to simple numbers, often overlooking crucial aspects of brand building and customer loyalty. As a marketer, it is my role to help educate clients on more complex ways to consider measurability of their advertising efforts. Sometimes it is impossible to do, as a business leader may refuse to acknowlege nuance, or might simply have rusted-on (and frankly, irrational) ideas around the dollar-value ROI they must get to bother engaging in any kind of marketing. These are thought-terminating ideas which simultaneously halt innovation in building a company’s reputation, whilst also damaging their business for anyone who may inherit it or buy it in future. We are unable to work with these clients, because they’re unfortunately looking for someone who is prepared to offer them false comfort (i.e. concrete accountability on ROI in a nuanced category), and when the project ultimately fails to match expectations their suspicion of marketing is further strengthened
While measuring what you do is important, it's isn’t insightful to assume that what you measure is the sum total of your business’ value. Consider this: many valuable activities that could be immensely profitable for your business might be shelved simply because they can't quickly and absolutely prove their worth in ROI terms. This includes everything from radio adverts to letterbox drops, digital marketing to client loyalty activities. An obsession with quantification has led to a dangerous neglect of customer service across many businesses, which directly impacts customer acquisition costs and long-term profitability.
Marketing as a Holistic Multiplier
When done right, marketing isn't just another department with its own ROI to justify. It's a multiplier that enhances all other business processes. It affects who you hire, how long they stay, and even how much you need to pay them. It determines whether your CEO's phone calls get returned promptly, whether you get invited to participate in that conference, or to feature in that podcast. In essence, good marketing is playing capitalism on easy mode – everything becomes less difficult, faster to achieve, and less expensive.
The Customer Universe: Quality Over Quantity
In their pursuit of measurable ROI, many professional services have narrowed their customer universe to those willing to interact on low-cost channels (such as social media). These are often cost driven clients, which doesn’t make them loyal or likely to refer: they’re either attracted by a sensational comment, a competition, or a pile-on. None of which enhance your reputation or bottom line! This short-sighted approach to attempting engagement optimises transactional efficiency rather than long-term profitability. Many’s the client who initially say they don’t care about audience reach and that their gauge of success are growing follower numbers of comments on a Meta post. Neither metric serve their brand in most cases, particularly in the professional service category where clients are more likely to observe your activity for a long period of time before contacting you or referring you on to friends and family. It's far better to define your customer universe profitably over time, even if it means investing more in high-touch, seemingly less efficient channels.
The Hidden Costs of Cost-Cutting
In the quest for immediate ROI, businesses often cut corners on customer delight and service. This strategy might show short-term benefits in terms of cost-cutting, but it's followed by a much longer and more expensive climb to rebuild faith in your reputation when your promise isn’t kept. Remember, keeping a customer is far more valuable than acquiring a new one, even if the former is harder to quantify.
For smaller businesses, understanding marketing psychology is crucial. Simple things like answering the emails promptly, having up-to-date social media platforms and quality photography or ensuring proper lighting and signage can make a big difference to their reputation. These actions send signals to the customer about whether a business is open, welcoming and engaged with their own values. The sin of omission – not doing these small but important things – often gets less attention than it should. Sure, it’s easy to add up what you spend on marketing each month; but what cost the lost opportunity of refusing to participate in brand hygiene?
Conclusion: A Holistic Approach to Brand Building
While ROI remains an important metric, it shouldn't be the be-all and end-all of marketing strategy. Brands need to take a more holistic view, considering long-term customer relationships, brand perception, and the overall ecosystem in which they operate. By looking beyond immediate returns and investing in less quantifiable but equally crucial aspects of business, brands can create sustainable success that transcends simple ROI calculations. Remember, marketing at its best is about seeing your business through your customers' eyes. It's about creating value, building relationships, and sometimes, investing in things that can feel expensive but signal your commitment to service. It 's this broader, more nuanced approach that will set your brand apart in a crowded marketplace.
Ruby Assembly is available to help build your brand’s reputation in the digital space. Contact us today to begin collaboration with our talented organisation.
