In the world of marketing and business, it’s all about ROI, right?
Well, not if you want to understand what is happening and what you can do about it.
Extremes are our enemy. Typically, we get tangled in the extreme of over-complication. We want to run statistical analyses, regressions, econometric models, and the like on our data, even sometimes on relatively simple data sets. This is when we alienate our audience by trying to look super smart rather than keeping the story simple and digestible. When we involve all of this mathematical alchemy, we can lose touch with the underlying business questions and get lost in the numbers, muddying the message.
On the other hand, overly-simple is equally a pitfall. That overly simple view typically boils down to the viewpoint that everything has to have a demonstrable ROI. And that, as they say, is poppycock.
I can’t prove this, but I think that on any given day, the vast majority of your “customers” (visitors on your site, people on your Facebook page, etc.) are in the high-funnel. Maybe not even in the funnel at all. They are just beginning their search for a washing machine. Just researching what replacing their old digital camera will get them in terms of picture quality.
In our media mix, we have keywords, emails, social engagement, display creative and more targeted to the high-funnel. Remarketing campaigns have the sole purpose of bringing customers back after an “unsuccessful” visit. Keywords like “best digital cameras” drive consumers to commerce sites, when the consumer is almost certainly looking for content to help them narrow the field and is not yet a buyer.
And what do businesses do? They measure it all to ROI. Spend vs. return. They see everything through the lens of our business, rather than through the lens of the consumer. And that’s really just not the best approach when you want to understand what will lead to greater financial success in the future. This view just doesn’t give you enough detail into why things are working or not working or what you can do about it.
A consumer’s interaction with our business is a chain of micro events that hopefully leads to macro outcome in terms of a sale, a subscription, a lead, etc. It’s in these micro events that our business “leaks” customers. And the only way to see this leak clearly is to zoom in to each element and measure the business’s success at that level.
I think that luxury hotels offer a great metaphor for how this works. Luxury hotels want your loyalty. And the way they earn it is not a single coup de grace, it’s a sequence of tiny little events that all go perfectly.
When you arrive at the Four Seasons, for example, the valet will open your door and ask you if you are checking in (unless they recognize you, in which case they will welcome you back). When you give him your name, the valet will wait for you to turn around, immediately radioing to the front desk where they will look you up to see if you are a repeat customer. The desk then immediately radios back to the valet and doorman. By this time, you’re at the doorman who is swinging the door open. He says, “Welcome back, Mr. Smith.”
Throughout your stay, you notice everything. The flowers in the lobby. They politeness of the front desk clerk. The professionalism of the bellman as he asks if you’d like your hanging clothes to be put into the closet for you. You notice every aspect of the room: its cleanliness, the smell, whether the clock on the bedside table is correct.
When you come back out into the hallway to head out for the afternoon, employees you see in the hallway step aside to let you walk by. They push carts out of your way and everyone greets you and wishes you a good day. On the way out the door, they will hand you an umbrella if rain is in the forecast and may offer you a bottle of water and directions, if you need them.
And this goes on and on throughout your stay.
Now, here is the thing. Each of these actions has an ROI, it’s true. But each of these things is partially or completely dependent on all of the others. The ROI of the doorman can’t be localized to the doorman. If the room smells funny, your entire experience could be marred. Your opinion of everything else changes because of one “leak” in their system.
With your web site, your social media, your marketing channels, etc., it is no different. The ROI of your marketing channel is completely dependent on your landing pages, your product detail pages, your cart, your checkout process, everything. Yet we measure this channel to an ROI. And going even a step farther, we measure even the high-funnel segment of this channel to ROI as well. These being people who are not there to convert; they are there for a different micro case you could measure and optimize against.
The only way to be an effective analyst is to intimately understand the role of each of your micro-events and find opportunities to improve. Almost zero A/B or multivariate tests should have sales, revenue, or leads as the goal or measure. There is simply too much in-between — this is not to say don’t look at it, just realize that any single interface is rarely intrinsically tied to the end-game. You need to look at the pieces themselves. Make each piece serve its function perfectly. As you eliminate leaks on the micro level, the macro level will take care of itself. Faith-based initiative? Sure. What isn’t?
I know that the culture of ROI exists in most companies and your colleagues aren’t going to want to talk about sissy pants micro conversions. But that’s where the magic is. Your customer reacts to every little thing presented in your marketing, your architecture, your interfaces, etc. Consciously or not, your customers judge you and interact with you by the micro. So if you want to keep more customers and make your existing customers more valuable, judge yourself like they judge you.