Measuring ROI

Marketers are coming under increasing pressure to demonstrate the Return on Investment (ROI) on their budgets.  The usual approach of showing sales per marketing spend is no longer acceptable because it ignores the dimensions of customer or product profitability and gives no recognition to the longer term value created by brand-building activities.

VIA International has developed a methodology that attributes both short and longer term value created to discrete marketing strategies. Termed ROMI or Return on Marketing Investment, VIA's methodology differentiates between marketing "Opex" (operating expense) and "Capex" (Capital Expenditure), recognising the impact these two types of expenditure have on building sales uplifts as well as longer term impacts on customer life time values.  Using Economic Value added concepts that are accepted in the financial community, VIA's ROMI enables marketers to compete for resources on equal terms with operations, manufacturing, R&D, etc.

Key to ROMI is the visibility it provides of the key drivers of value creation. This is essential for marketers to understand why their strategies do or don't deliver the returns they expect. Unlike many tools in this area, which are effectively black boxes processing multiple inputs to predicting sales uplifts, VIA's ROMI tools show whether customer acquistion, retention or extension is driving returns. The tools show both predicted ROMI and actual ROMI enabling active learning to improve future marketing planning.

Currently being implemented at one of our clients in its EMEA region as a pilot for global adoption, ROMI is at the heart of its transformation in marketing effectiveness and efficiency. New dashboards are being built that show not only targeted volumes, revenues and profits by product line and customer segment but also the ROMI on each marketing objective and strategy, together with the relative impact of the key drivers.