5 Pitfalls to Avoid When Measuring ROI


Measuring the results of a business initiative is imperative to good management. But avoid these pitfalls, which can give you inaccurate results:

  1. Thinking that if it can’t be measured, it isn’t important. We know certain things to be true, even though they are hard to measure. It’s true, for example, that an employee who feels under appreciated or unfairly treated will not be as productive and effective as one who is. We know that motivation plays an important role in individual performance. All of these things are impacted by corporate behaviors and language, yet difficult to measure. It’s ok to develop initiatives that build on solid assumptions like these that can’t be measured—as long as you’re intentional about it.
  2. Not taking into account the cost of missed opportunity. So you had 200 people attend your health fair or special event, but used 70% of the organization’s marketing resources for the two previous months. By doing so, you said no to other initiatives—perhaps things that would be of higher value to the organization, like focusing your efforts on a new strategic partnership. Remember that saying yes to something is always saying no to something else. So before you get excited about a result, ask yourself whether what you’re measuring came at the price of a bigger marketing opportunity.
  3. Measuring the wrong things. Measuring social media traffic, for example, might be a misleading data point. It’s possible that a campaign which has high entertainment value, for example, can attract viewers, without influencing purchase decisions. I’ve gotten a laugh from some ads for products I never intend to buy. So take care to be sure that what you’re measuring really can be linked to business results.
  4. Spending more to measure than an initiative costs. Enough said.
  5. Faulty causation assumptions and conclusions. Let’s say you’re launching a new service line, and your marketing campaign yields less impressive results than desired. Is the campaign not working? It could be. But it could also be that the service lacks consumer demand, that one aspect of the campaign wasn’t working (the messaging, or distribution channels?). Or that the competition is too intense. One cannot always presume that sequence suggests cause. When drawing conclusions from measurements, it’s important to understand and account for all of the potential variables contributing to success.

By avoiding some of these common pitfalls, we can all become more credible and successful business people.