The Marketing Report Card

Did your parents ever let you get away with reporting the number of right answers you earned on a math or history exam, as opposed to the grade or % correct? Of course not. They wanted to know how well you did, given the possible.

Like the number of correct answers, investment ROI needs to be viewed in the context of the entire opportunity.  Otherwise, like the number of correct answers on a test, it is not very meaningful.

Some say that knowing ROI gives you a “sense” for how you might better invest your resources. However, ROI is an average return and in and of itself offers little insight into how you should adjust your investments.

Fear not, the return on the marginal investment is the unique guide for increasing ROI because it measures the return for each unit of marketing. If you earn more than you spend on the next unit of marketing then increase it, if you earn less, then decrease it, there’s nothing more to it.

If ROI neither indicates the quality of an investment, nor provides insight into how to improve an investment strategy, then it should not appear on the marketing report card.

Next time you produce your marketing report card there better be a grade based upon your attainment of potential ROI, and make sure the assessment clearly indicates the return on the marginal investments to guide improvement.