ROI is What Actually Happens

Executives tend to be short-term thinkers. Their career has grown through easy-quantifiable successes, and they’re constantly pressured — by other short-term thinking executives — to base their actions around short-term metrics. It’s all about what happened last quarter, or last month, or even last week. Nobody’s incentivized to work on a 100-year plan. They just need some numbers to go up right now so they don’t lose their job.

This short-termism has created a business environment where people talk about ROI in over-simplified numbers. Reality doesn’t fit on a spreadsheet, so we focus on the video game scores, trying to use short-term metrics as proof that we’re doing our jobs well.

Executives are wary of the non-numeric aspects of business, so they make the colossal mistake of focusing almost exclusively on short-term, easily-measurable gains: hits, clicks, conversions, followers, fans, signups, etc. They make short-term, tactical changes to optimize those numbers, mistakenly thinking that higher scores means better business.

In the process, they lose sight of the bigger picture. They increase their Google AdWords spend or host a Twitter contest or manufacture a web traffic spike, and then show those numbers to their boss as “proof” that it’s working.

But it’s not working. The actual problem was that nobody understood what the company was about in the first place, or they came across as antagonistic, or they looked old-fashioned. They’re in a big branding hole, trying to dig themselves out with numbers — and it’s not working.

We’ve been trained to think of ROI as a pretty number that guarantees your boss will be impressed with you. It’s not. ROI is what actually happens, not the pretty number.

• When you spend your budget juicing your short-term numbers, and the business fails because your spreadsheet couldn’t explain that nobody trusted your brand, that’s your actual ROI.
• When you tweak keywords to increase your lead gathering percentage, but nobody on your mailing list actually buys anything because they don’t understand what you do, that’s your actual ROI.
• When you hire an SEO specialist to improve your search rankings, but you’re directing them to vague website that fails to capture their attention, that’s your actual ROI.

All the “touchy-feely stuff” (branding, emotion, reputation, perception, connotation, etc.) significantly affects your bottom line. Your ROI is directly affected by your company’s brand.

The hard part is remembering how important the complexity of branding is when you look at all the simple and enticing short-term metrics.

You just have to ask yourself whether it’s more important to win in the short term, or win in the long term.