Screw ROI. ROE Really Matters

All guerrilla marketers are familiar with the following scenario. After receiving an RFP, the creative department has crunched out a fabulous campaign that’s not only guaranteed to generate buzz but is also well under budget. Everyone involved in the campaign is totally stoked to hit the streets, and the brand managers around the table during the pitch are nodding their heads in enthusiastic accord. The meeting ends with handshakes and backslaps.

Then something weird happens. A week later, the client calls back in deep consternation; the higher-ups are putting the kibosh on the guerrilla campaign. The money is going to a more "proven" marketing discipline. The bosses are worried about ROI, and guerrilla campaigns are just too damn hard to measure.

The issue of ROI for guerrilla marketing forays is quite timely and has received ample attention in Strategy a few issues back. How do you measure guerrilla marketing success and failures? What are some common standards that can be used to measure guerrilla marketing, and when are those standards going to be developed? Will guerrilla measurement really hinge on just how many consumers received a coupon, visited a site or remembered a street stunt?

Man, I hope not. In fact, I propose that the term ROI is outright jettisoned when talking about guerrilla marketing campaigns, because the rise of guerrilla marketing makes present ROI measurement obsolete. That’s right. Obsolete. Guerrillas must base their measurement on a new term for a new way to market: ROE – the Return on Experience.

Let’s first look at two cornerstones of present ROI measurement – the number of impressions and the derived sales from those impressions – and how guerrilla marketing is poised to spin these metrics into a whole new way of doing business.

In the Internet heyday, success was measured in how many "impressions" a site or banner ad received. This type of tally wasn’t invented by online operators; they were merely copying the calculating norms of mass media – how many eyeballs saw a magazine ad or a TV commercial. Success in these realms is measured by excess. The more eyeballs, the better. Period.

The rise of guerrilla marketing is the beginning of the end for mass marketing as we know it today. Guerrilla marketers hone their strategies and tactics for an experience between a brand and a consumer, not merely an impression. This is a revolutionary change in marketing.

An impression for a guerrilla marketer can mean only one thing: a personal interaction with the consumer and brand to create a memorable and relevant experience that is nothing less than impressive. Watching television – and the ads – is a passive experience. But guerrilla marketing makes a connection with the consumer that hasn’t been achievable with traditional marketing. It’s not about reach, it’s about depth.

Now let’s say that sales metrics are the common denominator of ROI measurement – the "lowest-hanging fruit on the ROI tree," as Stephen Woods, former president of Pierce Promotion, called it in a recent issue of Promo Magazine. Then the real challenge for ROI measurement lies in the higher branches, where measuring such things as purchase intent, brand loyalty, personal values, conversion rates and other unpredictable consumer behaviors are harder to come by. The health and vitality of these higher branches are the crucial metrics for ROE measurement.

Guerrilla marketers are the vanguard of a whole new way of doing business, what Harvard University economists Joseph Pine and James Gilmore call the Experience Economy.

They posit that "the next competitive battleground lies in staging experiences. An experience is not an amorphous construct; it is as real an offering as any service, product or commodity. In today’s service economy, many companies simply wrap experiences around their traditional offerings to sell them better. To realize the full benefit of staging experiences, however, businesses must deliberately design engaging experiences that command a fee.

This transition from selling services to selling experiences will be no easier for established companies to undertake and weather than the last great economic shift from the industrial to the service economy."

ROE is long-term measurement. It is a continuum of consumer experiences, interactions and reactions that, if put in mathematical equations and permutations, would closely resemble those of chaos theory. But they shouldn’t. ROE isn’t wholly a statistics game, although quantifiable information should coexist with qualified insights.

ROE measurement is closer to anthropology, even history, than mathematics. Knowing that 100,000 coupons were distributed and 50,000 boxes were sold the week a guerrilla campaign was deployed is necessary. Charting and strategizing the future sale of millions of boxes resulting from the guerrilla campaign in the next week and in the next decade is crucial.

The purest guerrilla campaigns often originate in the nexus of the psychographic they are trying to reach and are sparked organically from within the core to reach the core. Guerrilla marketers know the ROE on a particular target psychographic because they constantly keep in touch with it, gauge it, learn from it and fully immerse themselves in it.

Measuring ROI is too clinical – you just have to think of those one-way mirrors in focus groups sessions to quickly conjure up images of lab rat experiments. Measuring ROE should be organic, a process that comes from within. Every guerrilla program must deliver brand messaging outward, and at the same time, take in and absorb consumer insights and demands in an informal manner with reporting standards that move away from ROI metrics and into ROE territory. Every campaign should result in better understanding of the consumer beyond the original scope of the program. This goal should be inherent in every plan of attack. It’s part of ROE.

If guerrilla marketing is the early manifestation of the Experience Economy and the power of experiential marketing, then the methods of measuring ROE should be experiential as well. Informal exit surveys, residual measurements, long-term tracking, Internet querying and one-on-one interviews are the tip of the proverbial iceberg.

The question isn’t whether the Experience Economy is going to occur, but rather when it’s going to happen. Marketers need to make the transition a smooth one. The first step is to forget the transactional metrics of ROI and focus on the equity-building ideas of ROE. Now if only the bosses could wrap their heads around the concept, and step confidently into a brave new experiential world.

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