Why ROI isn’t always the best (or only) yardstick to measure marketing program success.

As marketers increasingly spend their dollars on a range of digital marketing strategies, they typically defend their stance with simple claims of the Web’s superior return on investment. High-tech channels, they insist, are proven effective by the ratio of generated revenue versus the low cost of using them. Traditional channels such as mail, they think, can’t compete at those attractive cost levels.

Practically speaking, it’s time to think about what we mean by “results” before we talk about what channels can deliver. Most marketers’ goals often go much deeper than what simple ROI on, say, an e-mail campaign might suggest. And if CMOs or CEOs aren’t mindful, over-reliance on simple ROI as a singular measure of effectiveness can lead to assumptions about the effectiveness of a channel or a campaign that are simply wrong.

Marketers should think much more broadly, moving beyond just ROI to retain a laser-like focus on the overall marketing objective: Are you engaging and connecting with the marketplace to create customer leads? Generate new business? Changing attitudes or behavior? It is the return on such objectives — the ROO, if you will — that may be the true gauge of how marketing is serving you.

Consider how one large Kentucky hospital rethought its marketing objectives and its over-reliance on digital communications to craft a mail-driven, multi-channel campaign that boosted revenue and scored big against deeper marketing aims.

Traditionally, hospitals strive to increase revenue by bolstering physician referrals. If just one doctor directs a patient to a particular hospital, that referral could represent thousands of dollars in medical facility revenue. As a result, many hospital marketers thought it was enough to simply reach out to doctors by e-mail for referrals. The low cost of the e-mail blasts combined with the potential value of even a single referral promises a juicy ROI.

But one referral meant little to an operation of the Kentucky hospital’s size. Its business objectives demanded deeper relationships with a larger base of potential patients, which meant more comprehensive and substantive communications. So they developed a multi-channel campaign centered around direct mail to physicians and area residents, and buttressed the mailings with
TV ads and sponsored lectures.

Why wasn’t e-mail enough? Well, the behaviors the hospital marketers needed to stimulate required deeper conversations with consumers. The mail program accomplished just that. The hospital depended on the “show, share, and pass-along” qualities of mail to reach and connect with a larger group of individuals whose influence, recommendations and opinions help a sick loved one make intelligent choices on where to seek care.

As a result of the integrated campaign, the hospital enjoyed strong consumer response. Outreach to the hospital call center skyrocketed. And revenue grew far beyond their forecasts.

As this example shows, achieving meaningful objectives through real engagement with consumers can depend on strategic factors that don’t stem from a number on an ROI spreadsheet.

Unfortunately, the lure of technology tempts many marketers to take narrow and short-term views because they believe that digital channels can deliver customers and revenues at lower costs based on various representations of their
ROI. But can they really scale in terms of impacting behavior to achieve desired changes?

Sure, direct mail “ruled” because, for many years, it was the only medium that could be measured. Now, e-mail targeting and list-gathering efforts have improved enough to represent a fairly strong ROI. But does an ROI value by itself mean these new channels really outperform the proven veteran and deliver the impact brands need — or does it lull marketers into a false sense of confidence?

To get a full picture of the impact of your marketing, start with a clear sense of your true objectives — before setting out to reach any of them. Doing so ensures that no single measure supersedes others and that the only gauge worth using is the percentage of that objective captured. This means that you’re not just worrying about dollars earned vs. dollars spent, but also about your performance in meeting other key goals.

Yes, return on investment can be a decent tool for some matters, but ROO — Return on Objective — is a more inclusive measurement. And direct mail, unlike any other medium, can offer a great return on objective.

Your ROO isn’t just about how much you make; it’s about what you build. Still, in today’s tough economic climate, marketers are so convinced that they need a hard number to prove marketing success that they easily fall back onto ROI. But you don’t need just any numbers — you’ve got to have the right ones.

David Shoenfeld is senior vice president of mailing services at the United States Postal Service.®