Subscribe Did a colleague forward this newsletter? Sign up to receive your own copy. News & Events Suzanne Lowe spoke at the Legal Sales and Service Organization Raindance Conference in June. See the LSSO Web site for details on the conference. CMO Magazine article Perception is Reality June 2005 Kennedy Information's Consultants News article How To Adjust To Marketplace Shifts Successfully (paid subscription required, see July CN archives) July 2005 emerson consulting "Thought Blog" interview with Suzanne Lowe July 2005  RainToday article Differentiation: The Cornerstone of Marketplace Mastery (free registration required) June 2005 Recent Issues Don't Bore Me With Your Blog August 2005 Consulting Case Study on Account Planning and Relationship Management Programs July 2005 Mastering Professional Service Firm Account Management June 2005 You can order Marketplace Masters from Barnes & Noble, Amazon, or your favorite online bookseller. For bulk sales please contact CEO-READ.

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Measuring Marketing ROI

If you’re like most leaders of professional service firms, you probably feel pressure to create and implement results-oriented marketing and business development programs. Despite an increasing amount of discussion and literature on measuring the return on investment (ROI) of marketing and business development, it can be hard to find relevant information on measuring marketing in your professional service sector.

Over the next two or three months, I’ll be writing about measuring the ROI of your marketing efforts. And, in partnership with PM Forum North America, I’ll also be inviting readers who are senior level professional service marketers to participate in a ground-breaking new study, “Increasing Marketing ROI at Professional Firms.” Participants will receive a complementary copy of the study.

Enjoy this month’s article, and stay tuned for details on the upcoming study.

Suzanne Lowe
Author, Marketplace Masters: How Professional Service Firms Compete to Win
President, Expertise Marketing, LLC

Does Your Firm Measure Up?

“Half the money I spend on advertising is wasted; the trouble is I don't know which half.”
              John Wanamaker, US department store merchant (1838 - 1922)

Does the thought of measuring the ROI of your marketing efforts give you heartburn? If so, you’re not alone. Measurement has long been a significant challenge in the professional services arena, and with good reason: it’s not easy to measure intellect-based, intangible services.

Since I began researching professional services marketing solutions nearly ten years ago, much has improved. In those days, marketing measurement was typically focused on promotion-related activities, and only a few brave souls were even up to the task. For example, only 23 percent of our respondents calculated a monetary ROI from their promotional vehicles. Also, most of them were measuring only the initial and most easily-trackable cash outlays – and not other important ROI features such as investments in time and innovation.

Measuring clients’ opinions and impressions of the firm and/or its marketing programs didn’t get much more attention. Only 27 percent of our respondents used formal surveys and evaluation forms. More often, they relied on anecdotal feedback and comments – not exactly rock-solid, compelling evidence!

Now that we’re in the post-recession days of the new millennium, interest in and talk about ROI has resurfaced – this time cloaked with more sophistication and commitment.

So why is marketing ROI still so hard to measure? I have some theories, which will be proven (or not!) by this fall’s Expertise Marketing / PM Forum North America research initiative.

Lack of Funding

Funding for the measurement of marketing ROI has not yet found a true home within professional service firms (PSFs). From our study data, we already know that most PSFs under-fund their client-facing market research efforts.

I’d venture a guess that the same holds true – perhaps even more so – for PSFs’ funding of their internal marketing ROI measurements. When there isn’t much money for measurement, it’s bound to be viewed as somewhat of a step-child. The few dollars that are devoted to measurement tend to be used for examining tactical campaigns. Moreover, I’d venture a guess that most PSFs do not have a formalized marketing ROI budget (a line item that is consistently protected and reasonably funded). With measurement being funded so variably, despite the recent increases in ROI lip service, it’s no wonder the marketing measurement engine sputters!

Narrow Focus on Promotion

Too many firms measure only the tail end of their marketing efforts. This means they’re focusing on promotional data, such as e-newsletter open rates.

This is a dual-edged sword, of course, because one has to start the measurement engine somewhere, and why not at the tactical level? Indeed, it’s good to see some of the bigger firms routinely measuring the ROI of their media coverage, or new leads from client seminars, for example. But for most of them, measurement for more significant or strategic activities, such as whether their differentiation strategies are competitively effective, is simply not on the radar screen.

Over-Reliance on Intuition

Most professionals have yet to go beyond their well-honed intuition about their clients and prospects. Admittedly, their subjective impressions about their investments in various marketing initiatives are highly valuable and should not be discounted. Yet most simply don’t perceive the potential value of objective information on how effectively their marketing initiatives are growing their share of their market.

This lack of ROI data means that many firms are flying blind in their marketing strategies and tactics. They simply don’t have enough data to repeat their marketing successes and avoid duplicating mistakes. Why, especially after the rough time had by all professional sectors during the recent economic recession, would any PSF manager be content to go back to the bad old days of subjective marketing investments?

Heartburn, Indeed!

The notion of not measuring marketing ROI is what should be giving PSF managers heartburn. It’s time for them to take an antacid and create a plan for measuring the ROI of their marketing strategies and tactical programs so that, unlike John Wanamaker, they’ll know exactly which 50 percent of their advertising – or other marketing approaches – is being wasted.

In our next two columns, we’ll explore what firms decide to measure and how they do so. We’ll feature a case study of how a prominent services firm turned its fortunes around by adopting a radically new – and deeply integrated – ROI measurement approach.

Take the confidential, web-based Marketplace Masters professional service firm differentiation assessment test for instant feedback on whether your firm is doing differentiation right.

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