Wednesday, February 8, 2017

ROI, ROE, R U even Relevant?

Much has been made of those acronyms. Personally I'm not sure I do find them relevant. What exactly is a return on investment? And why would it matter? We are always in the position of investing, whether in ourselves, someone else, a group. Are the results truly measurable when oft times we have a long wait to find out cause and effect?

For instance, to motivate a group of salespeople you create a contest that involves a trip if that salesperson sells a lot. You invest in the development of the contest, and then the program. And what exactly do you measure? The ratio of the earnings of the salesperson to the cost of the activity? Or is it about the trip forming a community of winners who can then motivate each other and eventually others as well? And how long would that take? When do you take the measurement?

Return on Experience... Return on Education... again, what's the measure? You provide education and you can, of course, test the retention or study how it has been applied. But when? Immediately or is it possible that a person learns something that might be valuable at a far distant future and has a true effect on some outcome? When might that be and how could it be measured? What's the return on "experience," and how is it measured? By smiling faces? By positive Instagram and Twitter postings (Sorry, I'm old-fashioned and don't know what today's latest channels are).

My measures come from hearing that people feel valued, have felt that they've had a great experience, or have been educated or motivated. I get that from talking to them in the here and now and truly listening to what they have to say. Far better than surveys or extensive studies on those acronyms.

I would love to hear YOUR thoughts on these rebellious ideas.

Andrea Michaels is the founder and president of Extraordinary Events, a Los Angeles-based, international event agency, and the author of Reflections of a Successful Wallflower:Lessons in Business; Lessons in Life. Andrea may be contacted via

1 comment:

  1. Andrea,
    Interesting discussion. I think there are three different levels for caring about Event ROI: Strategic, Organizational, and Tactical (Event-level)

    I understand and completely agree at the level of the event...many metrics may be valid and they arguably miss the big picture.

    The big picture for event ROI I think lives in the other two levels: strategic and organizational.

    Strategic: As an organization, which are my major initiatives for the year and how do I achieve them? Arguably, a with Dreamforce makes a strategic investment in events as part of its sales/ customer development/ branding strategy. There are massive dollars budgeted but the ROI is better characterized in the sales organization with the events enabling those objectives and targets

    Organizationally: this translates to VP's of Sales and Marketing signing up for different pieces of a revenue number to go with spend. Each will budget different amounts and design in different hooks to leverage the event to achieve different objectives. Finance signs off on the overall budgets in conjunction with organizational targets at a pretty high level.

    Tactically: You get a grab bag of different metrics from different parts of the organization funding various pieces of this massive event. The specific event doesn't offer a holistic event ROI, but is a vehicle for other pieces of the organization to drive their own ROIs based on the numbers they've signed up for.

    Important to get the levels right, as strategically, the events budgets are driven by a belief/ historical data that they'll help people make plan and hit their commitments (HR would have different ones, but it's not too dissimilar). The ROI elements upstream (strategically, organizationally) are what get event budgets past finance (especially in public companies, where executives are employed by shareholders to generate value).