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Proving ROI is really tough

Springtime, finally. The sun is shining, the birds are singing. Time for a good grumble about sales managers who claim they can prove their return on investment, because in fact they cannot. The context of the story? Communication, of course.

Our customers know that communication works (otherwise they probably wouldn’t be customers). Quite a few prospects think differently, however. Because they have doubts for many reasons, they often ask us to prove the return on investment for communications in advance. The questioner is often the sales manager who believes that his sales team’s return on investment is very easy to prove.

On paper, this is indeed very easy. Take the total sales cost, compare it with the proceeds and that’s that. Unless we ask some more difficult questions. Could the same yield be achieved with a 20% lower sales cost? And what is the proven performance of expanding the sales team? Which investments in sales are necessary to increase turnover by 15%? Or to increase the profit rate?

In short, it is impossible to prove the future results of any investment. What will be the return of a communication campaign costing 30,000 euros? No idea. What will be the proven efficiency of two additional sales people costing 200,000 euros? No idea. What is the pre-determined return of a new department that will cost 3.4 million euros? Again, no idea.

What is then proven in communication? That brand recognition, a correct image and an increased brand preference result in higher sales. That a good mix of communication and sales results in more sales leads. Slightly disappointing, maybe: these proof points are general and not specific. They apply to companies in general, but not necessarily to your company (because not only Promotion, but also the three other P’s from the marketing mix will influence the results).

In this sense, communication and sales are in the same boat. The sales director is trying to put his best team together, to train and closely monitor them, to aim at clear objectives and measure them, to segment customers and prospects, to monitor competition and so on. In communication we do nothing different.

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