Litmus Test No.3 is a short test that is almost never asked with sufficient rigour…
3. In pursuing a particular marketing strategy, is the Return On Investment (ROI) measurable?
As a long-time practitioner of Google AdWords, this test gets under my bonnet more than any other.
Measuring ‘return on investment’ is not the same as tracking conversions. Just because you’ve successfully copied and pasted a script onto your ‘thank you’ page, does not mean you’re now measuring return on investment.
Marketers love to throw ‘ROI’ numbers about, in pretence that they’re actually measuring the results of their efforts. In reality, these ‘ROI’ numbers are based on a giant leap of attribution.
“We created ads in that campaign,” the argument goes, “so therefore ALL the revenue you generated is attributable to US…”
I call this the ‘myth of linear attribution’. Usually, this is an extravagant link of cause and effect by marketers desperate to justify their involvement in a project (and possibly their fees).
In reality, attribution is messy and complicated. If you sell anything other than a basic commodity, a customer will visit your website multiple times before placing an order. They’ll arrive from multiple keywords. They’ll click on multiple email links. They’ll respond to remarketing ads on social media. They’ll do all sort of strange things you would never imagine…
(They might even pick up the phone, or call in to see you!)
How do you attribute credit in that web of activities? In reality, generating a sale is like scoring a goal in football (soccer). Somebody will eventually kick the ball into the net, but usually there is a team effort in the build up.
Yes, marketing attribution is can be complicated. Yes, you’ll never get a complete picture of what activities contribute to revenue. But that doesn’t mean you shouldn’t try.
In selecting a marketing strategy to pursue, you need to (as a minimum) be tracking traffic from that strategy in Google Analytics. If someone buys from you as a result of a particular strategy, you need to store that information in your CRM system.
Otherwise, how will you know if your efforts have been worthwhile?
ROI isn’t always the be-all and end-all. I don’t accurately track the ROI from these emails. I write them in blind confidence that I’m building a level of trust with my list that will eventually pay high rewards.
If that blind confidence turns out to be incorrect, I’ll eventually stop. Sometimes you have to give things time to play out. But in selecting a marketing strategy, you at least need an idea of how you’ll track the results of your efforts.
For the gold standard in marketing attribution, see the video I made a few weeks ago on Wicked Reports.