It's All About ROI

by Pete Kovac

In a way, marketers in the new millennium are portfolio managers looking for the right balance in their marketing mix to optimize return on investment.

What's keeping sales and marketing professionals up at night these days? Accountability! During the past year, survey after survey has revealed the growing pressures for performance and the need for tools to measure return on investment. According to one recent survey among marketing executives, 81% reported accountability has increased in their marketing organizations over the past 24 months. In this same survey, 59% said they must show a return on investment from their marketing programs.1

In another recent survey among marketing and executive managers, 89% of survey participants believe that return on invest-ment will continue to grow in importance over the next five years.2 Just how will those executives measure performance? According to this survey, actual sales and market share were the overwhelming choices of the numerous options available. The pressure truly is tactics to deliver bottom line performance.

These findings shouldn’t come as a surprise. Never before have marketers had such a myriad of tools to allocate precious marketing dollars. Daily, they are faced with the question of, “Where do I get the biggest bang for my buck?” Do I grow my sales force? Do I invest more in traditional advertising? Should I invest more in CRM (Customer Relationship Management)? Where does the Internet fit? What should my expectations be of direct? Is technology a silver bullet?

When actual costs are considered, black and white clarity can blend to gray very quickly. Recent surveys by Cahners Research and Forrester Research indicate the current average cost of a personal sales call has grown to $329.00. Telemarketing cost has risen as well. Currently, the average cost of a telephony-based sales contact is $63.00. Then, there is the competition for the customer’s share-of-mind. On average, 65% of consumers forget specific messages just 24 hours after exposure. How can the marketer determine where to be at the right time, with the right offer, with the right customer, with the right compelling message most of the time?

In a way, marketers in the new millennium are portfolio managers looking for the right balance in their marketing mix to optimize return on investment…year over year, perhaps even quarter over quarter. Like investment managers who are meeting or exceeding their investors’ expectations, marketers who demand top performance are relying on smart planning before any investments are made.

“Failure to plan is planning to fail.” This agency bit of business philosophy appears to be enjoying a rebirth of importance, even in our contemporary marketplace that seems hyper-competitive and changing overnight. During the summer of 2005, Nicholson Kovac, Inc. conducted a survey to better understand the challenges and needs of marketing managers in both consumer and business-to-business marketing arenas. The survey focused on trends. One practice surfaced loud and clear in this study—the growing importance of strategic planning. Needless to say, there are a lot of different ways to go to market. However, to derive the greatest return on the investment required, it’s well worth the time required to plan for success. Of course, the strategic plan should account for all the variables with contingency options.

In addition to the pressures of bottom-line performance, another common challenge compounding most marketers’ lives is ever-growing time deprivation. Is there time to do it right the first time? In this race-to-urgency business climate there isn’t enough time, or money, for second-chance redos.

The value and power of strategic planning has indeed moved to the forefront in the quest for marketing performance. Without doubt, the shortest path to success is to plan it. What exactly is a strategic plan? It’s simply applying marketing science against a single, realistic objective every stakeholder (or shareholder) can not only support but embrace. It is the unifying ingredient in performance-based success. Failure to plan is indeed planning to fail! Play to win. Plan.

Pete Kovac is President and CEO of Nicholson Kovac. He can be reached via phone at 816.842.8881 or by email at: pkovac@nicholsonkovac.com.