Back to measurement

It’s been a while… Nice to be back.

I continue to be productively busy at DIGIVIZER, the Australian social analytics company. (Hence the lack of blog posts here.)

Inevitably much of what we’re doing right now is about deploying and using the social web to make a difference to businesses. The social web remains the best place on the planet to  discover and then have personal conversations with people who matter (to your business) on a grand scale.

Around the edge always lurks ROI, ROE and similar attempts at measuring returns.

This blog (and this post) does not intend to discuss DIGIVIZER specifically (DIGIVIZER’s own blog is the place to go for that conversation) but it prompts, again, thoughts about measurement, analysis and returns.

I’m still reminded of a comment made by David Meerman Scott three years ago here in Sydney: he asked rhetorically why CFOs asked for ROI measurements on marketing or PR campaigns when they didn’t ask for ROI measurements on the cost of mobile phones used by sales teams.

His answer of course was because the use of the phones is essential to doing business and their was no point in measuring the ROI per call made.

Similarly with marketing generally. What value to we place on a conversation? Even in a commercial context is the value measured solely in sales or revenue? Probably not, even to the most hardened of CFO or sales director.

Apart from actually asking every single buyer what their detailed decision-making path has been that got them to their decision to purchase (assuming they remembered or cared, and the only accurate measurement) perhaps the best measurement is a simple one: for any given overall marketing (spending) budget, sales, revenue and profit go up year-on-year, and you spend less on getting the sales than the sales themselves.

If sales drop, spend less next year (or spend more and make more sales). If the trend continues, organizations simply cannot spend more (or even the same) on marketing (and all its components), so cuts are inevitable.

We still end up at the same spot: a return on investment and effort. It’s just that the three numbers that count the most – cost, sales and profit – are all we need to measure.

About alansmithoz

Head of Strategic Business Communications at Australian social analytics technology company Digivizer, with a background in corporate public relations and marketing. I do what I do because I believe communications can make a difference.
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