A final word on ROI

About once a month, someone asks me about ROI. It happened last week… right on schedule. Like so many other elements of marketing, it is misunderstood. Maybe this will clear things up a little.

Everyone… including me… would love to be able to measure the value of any single marketing investment. And, that would be possible if converting a sale in a small, professional service business was as easy as ordering a pizza.

Think about ordering a pizza for a minute. Pretty much, you know what your options are, regardless of the brand. You have an expectation of the price, lots of brands from which to choose and an idea of when it will be ready. In these and many other ways, you are a highly educated consumer when it comes to pizza. And, when you are hungry, you will even compromise when it comes to your pizza.

Since the vast majority of the public is this way, formula marketing on a massive scale works predictably. Under these conditions, the marketing industry has established response rates that are true… but can be confusing in the hands of small business owners.

Direct mail is a great example. Pretty much everyone knows or has heard that direct mail yields a 1-2% response. If you do a little homework, you can even raise that same-list response rate as high as 10% with mailings over a 5-6 month period.

So, in the case of a cosmetic surgeon or a cosmetic dentist, should you expect the same direct mail response rate of 1-2%? Well, is your sales process anything like buying a pizza? And, is the market for your cosmetic services as educated as the pizza buying market? Not by a long shot. Where, then, does that leave you in deciding what is good marketing for your practice if you cannot evaluate given elements of the plan in terms of return.

In the case of a service business, especially high-end professional services like our clients, the process of converting new business is more complicated. This is why we have our clients focus on the three distinctively different principles of marketing, media and sales. Each is part of the process of getting a new client. And, this sort of complexity keeps you from the fine sort of ROI measurement that all of us want so badly.

For example, let’s use another direct mail example; this one is from a professional small business, a cosmetic dentist. Two thousand mailers go out to a targeted list and the dentist is expecting a 1-2% return or 20-40 calls. Is this realistic? Will 20-40 cosmetic dentistry cases show up as a result of the mailer? Will the phone ring 20-40 times?

Likely the answer is no. But, the response is probably there. Our clients normally see a spike in web visitors following a direct mailer. Normally, we see some calls from mailers but the web response is almost always stronger. So, if someone responds to the mailer by checking out the practice online and the web site does not engage and sell the lead properly, it lowers the perceived ROI from the mailer.

Let’s take it once step further. Say the same mailer generates a phone call from a patient who is already interested in finding a new dentist. If the person answering the phone fumbles the lead and loses it because of poor sales training and customer service skills, it diminishes the perceived ROI from the mailer.

Most of our strategies help clients understand what responses they get from the individual steps. Ask me about tracking phone numbers and detailed web stats if you are not one of the clients who use these tools. And, hopefully, with this example, you will see why we cannot use single-activity ROI for small businesses.

Instead, this is how we recommend you measure your ROI. You measure it in terms of your total investment and your total gross growth. So, if you invest a total of $25,000 in marketing, media and sales improvements and you bill an additional $75,000 in a year, your ROI is 3:1. This simple formula will allow you to measure over longer periods that you maintain commitments to developing your marketing, media and sales. If you follow our advice and address the three main principles of marketing on a big-picture level, figuring your ROI will not drive you crazy and you will be doing it right.

Scoreboard!

I waited 23 years for this... a real reunion tour by The Police. Today, I got tickets for the Dallas show in an exclusive pre-sale. Floor seats. Expensive? Yes. Am I keeping them? No.

More later on my mission to get on the front row. The over/under on how close I will get starts with Row 3. Place your bets. The show is June 26.

Another great DSM custom web site

http://www.makingawesomesmiles.com

I am happy to promote this new web site for Doug Brossoit, DDS in Spokane, Washington. This custom Flash site will be enhanced with video from a DVD we have recently completed for Dr. Brossoit.

If you have never been to Spokane (and I lived there for three years), this site reflects the beauty of the Inland Northwest better than the local Chamber of Commerce media. Spokane is a medium-sized market that is very loyal to its own. This site is the ideal first impression for Dr. Brossoit. And... wait until we get the video on here.

That is two new, custom sites finished in two weeks. Wait until you see the next two from clients in Oklahoma City and Chicago.

Is there any wonder why DSM custom Flash designs are so in demand?

What is 9/10ths of the battle?

I always tell our designers that if you have great graphics, it is not hard to make a great web site. I was reminded of this earlier this week as I was looking at John and Michael Bixby’s new web site and a few others we will be finishing in the next several days.

Today’s great advice is to invest in photography. It will make the biggest difference possible for your web site and your marketing materials.

Need a good movie this weekend? Me, too.

With the Oscars coming this weekend, there is a lot of talk about movies... and a lot to read. I saw a story in the Dallas Morning News about a German movie that is a good bet to win in the Best Foreign Film category. It was called The Lives of Others and I have not seen it so I cannot recommend it.

However, I can recommend the best movie I saw last year... The Illusionist. It is on DVD now and I recommend it. This film about a Victorian era illusionist in Austria is nominated for Best Cinematography this year. Edward Norton plays the lead.

The Prestige, another movie about turn-of-the-century magicians that had a much higher profile director and cast opened weeks later. That film as great, too, and it is also up for Best Cinematography this year.

Either is a great rental for different reasons. I wouldn’t mind owning both. But, if you want a for-sure payoff, go with The Illusionist.

Enjoy.

Think of this while making your marketing budget

In case you haven’t noticed, AT&T is absorbing the its wireless brand, Cingular. The transitional ads have been running about three weeks now. Cingular was developed as a stand-alone brand for wireless service but AT&T is responding to market research that showed consumers prefer bundled services. So, AT&T is investing in un-doing everything they have put into building the Cingular brand.

So what does this mean to you? There is a lesson on spending in this for you no matter the size of your practice or small business. If you are in an area where the ads are running, try to notice how many you see in a week... or if you are a real media junkie, how many you see each day.

The point is, this is how you spend to influence brand.

One of the biggest issues new clients bring to us relates to spending on media. A big buy for you does not even get a major brand started. That is because branding in the media requires a good campaign plus two key factors: money and frequency. As a small business servicing a niche, you are not going to get any breaks. For you the hill is higher.

AT&T are spending millions on re-establishing an element of one of the strongest brands in advertising history. And, there is a good chance that you learned about his here. What does this say about what you can afford and how you should be allocating your marketing funds.

This is one of the best areas in which we advise our clients. I can’t tell you how many ad campaigns we have discovered that are just money pits... and the client keeps them going because they do not know any better. Well, I can tell you... there are better options out there.

Direct marketing, one-to-one marketing, Internet marketing... they are all more cost-effective strategies if you feel like you are throwing away your money on an ad campaign that is not working. And, if you have to ask if its working... it usually is not.

Another great DSM web site

Congratulations go to John and Michael Bixby of The Atlantic Center for Advanced Dentistry! We launched their new web site today at www.drbixby.com.

DSM Art Director Julie Teasley was the designer and she did her usual fantastic job.

BTW: A note to all who want an original Dog Star Media custom web site: Do what the Bixby’s did and invest in photography. Top flight, professional photography is always a smart addition to the site. Notice how sharp and well-presented the photos are on drbixby.com.