Many of the problems that service businesses have in tracking marketing ROI is due to a) the lack of viable data to analyze, b) faulty assumptions that businesses make and c) some inherent problems with current ROI models.
There is a methodology however that offers real promise for providing service businesses with the information they need to make good decisions. That methodology is called History of Client Origin (HCO).
In HCO, the genesis of every new client or customer is traced. In most cases, such new clients are the result of multiple exposures to a variety of marketing vehicles and/or individual interactions. These individual interactions include those a client may have had with family, friends or colleagues; members of the organizations and/or other past or current customers of the business.
Utilization of such an approach allows one to ascertain marketing ROI and related metrics in a much more holistic manner, including for those types of scenarios where ROI is or has not been typically measured. Some examples of these include:
- Results from non-direct activities (e.g., brochures, web sites, etc.)
- Situations in which clients have been exposed to the organization via more than one medium
- Situations in which clients come to the organization through word-of-mouth
Further, the HCO methodology incorporates one of the major expenses usually not tracked by traditional ROI approaches — time. For many service businesses, the investment of time represents one of, if not the single largest marketing-related expense. By capturing this data, marketers at such businesses are able to ascertain the best use of the organization’s human resources.
HCO also enables businesses to compare the effects of not just one marketing vehicle to another, but also of personal networking to traditional marketing.
Because HCO traces the origin of every new client, the ROI metrics obtained are much richer. For example, a single exposure to an ad, an article or a representative of the organization may have contributed in part to the obtaining of a particular client, who in turn contributed to the obtaining of additional clients and so forth — sometimes through several generations. By measuring the marketing ROI through such a prism, service businesses gain a clearer understanding of how the marketing and business development phenomena are exponential in nature, and thus which tools (or combinations thereof) work over the short and/or the long term. This is especially useful when new customers have been exposed to multiple media or individuals (i.e., touchpoints).