I was sitting in a 2010 planning meeting recently listening to the marketing team describe their objectives, strategies, and thoughts on tactics they were planning to deploy. Their question to me was "How should we measure the payback on this strategy?"
My response was: "Compared to what? Walking naked through Times Square?" I was being asked to evaluate a proposed strategy without any sense of what the alternatives were.
Sure, I can come up with a means of estimating and tracking the ROI on almost anything. But if that ROI comes to 142%, so what? Is there a plan that might get us to 1000% (without just cutting costs and manipulating the formula)?
As I thought back on the hundreds of planning meetings I've been in over the last 10 years, it occurred to me that we marketers are not so good at identifying alternative ways of achieving objectives and systematically weighing the options to ensure we're selecting the paths that best meet the organization's needs strategically, financially, and otherwise.
On a relative basis, we spend far too much of our time measuring the tactical/executional performance of the things we have decided to do, and far too little measuring the comparative value of things we might decide to do. Scenario planning; options analysis; decision frameworks. You get the idea.
The importance of this upfront effort isn't just in getting to better strategies, but in building further credibility throughout the organization. Finance, sales, and operations all see marketing investments as inherently risky due to A) the size of the expenditures; and B) the uncertain nature of the returns as compared to many of the things those other functions tend to spend money on. Impressing them with our thorough exploration of the landscape of options goes a long way toward demonstrating that we've considered risk (albeit implicitly) in our recommendations, and have done all the necessary homework to arrive at a reasonable conclusion. NOT necessarily producing a 50-page deck, but rather simply stating which alternatives were considered, what the decision framework was, and how the ultimate selection was made. (This also builds trust through transparency).
From a measurement perspective, we can then consider the relative potential value of doing A versus B versus C, and in the process raise the level of confidence that we are spending the company's money wisely. We can then turn our attention to measuring the quality of the execution of the chosen path with confidence that we're not just randomly measuring the trees while wandering in the forest.
I'm not sure how many businesses might get a high ROI on walking naked through Tmes Square, but imagining that option certainly helps fuel creativity and underscores the importance of measuring strategic relevance, not just tactical performance.
Got any good stories about wandering naked?