When it comes to the success of any business, no businessman can say that success can be achieved without marketing initiatives. Marketing is indeed critical in the success of any enterprise, simply because marketing lures more and more customers to your side of the fence. Thus, if there is a need to implement the return on investment balanced scorecard or the ROI BSC, it should be done in the aspect of marketing.
If you want to be able to evaluate and optimize your enterprise’s marketing budget allocation, then it is best for you to measure the results of your marketing schemes and initiatives. To further understand the matter, let us go into the concept of the BSC or the balanced scorecard first. The advocates of this managerial method proposed and developed by David Norton and Robert Kaplan back in the 90s would strongly object to having a management system centered on ROI. Rather, the performance measurement system would have to be balanced all throughout – meaning there should be a balanced mix of metrics that would include business outcomes and internal business procedures. These business outcomes could come in the form of financial results and customer satisfaction.
Yes, being a “balanced” scorecard to begin with, the tool itself should be primarily balanced. However, this does not mean that not much emphasis should be placed on ROI. After all, ROI is one of the most important metrics that you can use when it comes to evaluating programs and marketing schemes.
So, why is it critical to have an ROI BSC in marketing? First and foremost, one of the long-term and outstanding goals of any company is to earn high profit, right? There would be no profit to earn if there were no capital or investments to begin with. This, in itself, shows the importance of financial results and one of the more important ones to use here would definitely be ROI. It is only logical for a company to find marketing investments that garner the highest ROI possible and upon finding these and concentrating on these, there would then be more room to maximize profit.
To give a clearer illustration, let us say your company, with the ultimate goal of profitability, makes use of the following metrics: cost per acquisition, customer satisfaction, percent attrition, and ROI. As you can see, all of these metrics are ultimately related to profitability. For the most part, businesses think customer satisfaction is the only critical metric in terms of revenue generation. Yes, it is indeed a critical metric, but there is still a need to make that link explicit. For instance, if a particular marketing scheme that is aimed at leveraging customer satisfaction does not really yield that much ROI, then implementing this scheme would not be worth the effort at all. See how return of investment plays a huge role?
This is precisely why it is important to have a return on investment balanced scorecard in marketing so that you yourself can determine which marketing schemes the company should make use of to garner more profit.