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Return on Relationship, not ROI

Jan 9, 2018
Return on Relationship, not ROI

For years now ROI, or return on investment, has been the ultimate measure of marketing strategy success. What form this return takes is subject to change, and can include financial return, engagement levels or increased brand awareness, but ultimately the function of investment as input never changes.

But what if this measurement is no longer as relevant for modern marketing as it was in earlier times? As we step into a new year, and one which, according to The Drum, is likely to see a continuation of ‘data-driven, one-to-one tactics’ and perhaps even a move towards ‘one-to-moment marketing,’ marketers must adapt their techniques to suit the ever-changing demands of strategy. 

So what is Return on Relationship?

This is where Return on Relationship (ROR or RonR) comes into the picture. The term was first coined by Ted Rubin, CMO of Brand Innovators and co-founder of US shopper media company Prevailing Path. Back in 2013, Rubin featured in a Forbes article by contributor Cheryl Conner and explained his role as ‘Chief Hugs Officer’ or CHO. Seeing CHO as an ‘extension of our culture and my philosophy of Return on Relationship - always finding opportunities to metaphorically hug/embrace customers,’ Rubin quickly piqued the interest of marketers.

Rubin sees ROR as the common sense answer to such questions as ‘what's the ROI of Loyalty?’ and ‘what's the ROI of Trust?’ When worded in such terms, it is clear to see that relying on measures of investment is too limited to measure the success of social media platforms, for example, which are often built on relationships and connections. Summing his philosophy up as ‘awareness equates to revenues. Differentiators drive margins. Authenticity maps to loyalty and advocacy,’ Rubin’s ideas have only grown in importance since they were first articulated.

How can you craft an ROR strategy?

While knowing what ROR involves is half the battle, actively making the shift from more entrenched forms of measurement such as ROI takes time and effort to bring about a change in organisational culture. Here are three ways you can make a start:

1. Push for customer centricity

According to an article by EConsultancy, there are a number of clear steps that marketers should take to improve their Return on Relationship. It is suggested that, first of all, brands must ‘get serious about becoming customer centric.’ In order to do so, each member of the team must undergo customer experience training and KPI’s need to be reoriented accordingly to reflect the move away from investment as a key measurement.

2. Invest wisely

Yet of course finances and budgets are not to be made redundant, with Econsultancy suggesting that 

‘In 2017, companies globally are expected to spend $1 trillion on marketing for the first time ever. Of that, nearly $600 billion will be spent on advertising and it's estimated that only around $10 billion will be spent on customer service.’ 

With such a clear divergence in spending between advertising and customer service, and customers saying that they would pay more for better service, Econsultancy believes brands are missing an opportunity to provide what customers want and need.  

3. Embrace change

Forbes contributor Steve Olenski, in conversation with Lou Paskalis of Merrill Lynch, suggests that although people across many sectors repeatedly make the same ‘errors of measurement,’ the old model will not be quick to die out. Paskalis suggests that ‘the fact that everyone understands the old model and it often appears to work “good enough” [has meant that] some people have been resistant to change.’ 

When asked whether those organisations that remain resistant to change can still be successful, Paskalis argues that while he is hesitant about over-generalisation, ‘I will say that companies that don’t make this pivot will lose an almost imperceptible bit of salience with their customers in every interaction moving forward.’ 

Embracing the need to change can be a huge leap in the right direction for those brands looking to switch from ROI to ROR. While it may not suit every organisation or indeed every campaign, there is little doubt that ROR is becoming increasingly relevant in our personalised and data-driven marketing age.


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