Not praying at the altar of ROI
My business partner is gonna kill me for this post. But if he feels he can write a witty enough retort he can go right ahead (he can’t, my prose is way too beautiful). I hate ROI and the obsession with it. I am 2 subjects off an MBA so I should love this stuff, but I don’t. In certain cases, I am willing to concede it is essential (no point having facebook ads if you aren’t recording what it gets you). But in certain cases there is no possible way to measure ROI — and in most peoples eyes if you cant measure it, it isn’t worth doing. That is bullshit and here is why.
“Soft ROI” or measuring the immeasurable
At Knokal measuring ROI should be pretty simple. Any exercise we do, should be divided by the number of signups we get from that activity. But that falls down the second you look at the long term. In late June I attended the EOFY event for Like Minded Bitches Drinking Wine. Because of my Y chromosome I can’t join their facebook group, and I am only allowed to attend 2 events a year so I need to see a return — right?. I didn’t get one account signup from it. So from an
ROI point of view
ROI = cost of ticket/signups
ROI = $52.50/0
ROI = 0. ROI for this event was bad.
But examine the “soft ROI” or the intangible/immeasurable. We had a horrid week that week, so just getting a few drink vouchers at the door was good enough. But more importantly I was able to reacquaint myself with people I respect immensely and I got to meet some really good up and coming business people who have that energy and enthusiasm that is contagious. And I got to learn about how to create a sense of community from the girls at LMBDW. The way everyone in that room spoke about the support they get in the group really made me reassess how I was creating my community. I also got more entrepreneurs to follow, and suggestions on blogs, podcasts etc so I can continue on my entrepreneurial journey. So, no signups but a tonne of insights and more lessons in a few hours than most courses can offer. Lessons that I have taken and are still applying. Does the ROI still = 0? The sum says yes, the human says no.
Another example was an exhibition we did last week — New Beginnings Fair. Now this one should be easy to work out — we got signups. So ROI should be cost of exhibiting/signups. But it doesn’t tell the full picture. We had this beautiful little system ready of using Ipads to onboard — until the Ipad gave us issues. I had to improvise and use my mobile. So I decided to get the customer to onboard themselves on my mobile with me watching. Now the exhibition stopped being about ROI and started becoming a usability lab. The feedback I got was invaluable. Seeing where people got frustrated or hesitant in the process told me what needs to be streamlined or improved. We have people on our site all the time, but I can’t watch their faces while they sign up. I hope they send an email if something annoys them. I got live feedback from my target market. I got a usability lab and customer acquisition in one. The ROI for New Beginnings Fair was good — the “soft ROI” will change my entire business for the better. I don’t know how many more signups and happy customers this will achieve in the future, but just because I can’t quantify it, doesn’t mean it isn’t valuable.
In conclusion — ROI is an easy to understand metric. But life isn’t just about metrics. Sometimes getting yourself out there and understanding your tribe is 100x more useful than a signup. You just need a balance. ROI gets the business generating money and helps decision making. Soft ROI balances that out to a better understanding of yourself and your customer. A good blend in decision making should make everyones life easier. Get yourself out there and start learning.
