Hard or Soft Sell: ROI vs ROE
By Judith Sherven and Jim Sniechowski
As a marketer, ROI is the point. But for the customer that’s not always the case. Understanding the difference between ROI and ROE is critical to your business
ROI, return on investment, is the measure by which most marketers determine the value of their decisions. If their cash investment returns a profit over and above their initial outlay they judge their decision to be a good one.
Because they see themselves in the business of making money, most marketers habitually — i.e. unconsciously — view their transactions from an ROI perspective. Because numbers are an incontestable, hard proof, ROI becomes their default measure for business achievement and success.
But, as valuable as ROI is as a measure, it applies to only a very small segment of transactions in the market place. Using it as the default outside that specific set of transactions creates a potential distortion in the way marketers relate to their prospects and customers, because they assume their customers use it in the same way as well.
Return of Experience
There is a different kind of commercial transaction in which ROE — what we call “Return of Experience” — is the dominant concern for the customer.
Think of it this way.
If you sell a hard numbers product – say stocks, bonds, or real estate — both you and your customer expect the transaction will return a profit. ROI is the measure of success for both of you.
But what if your prospect is in the market for a pair of shoes, or tickets for the most recent romantic comedy, or to book their honeymoon in Paris? Do they expect the transaction will return the money they’ve spent and then some? Of course not. These are ROE, return of experience transactions – qualitative instead of quantitative — mostly felt instead of calculated.
By identifying sales success only through ROI eyes — a case of marketers myopia — marketers are in jeopardy of distorting their marketing message because they do not clearly understand and therefore cannot best connect with what the customer wants and expects.
Much of online marketing suffers from this ROI blind spot, depreciating anything but the calculated, quantitative measure.
A Different Promise
There is a growing group of online marketers who bring to the marketplace a different type of product and therefore a different type of promise.
We call them Soft Sell marketers. They sell a change of experience — emotional, intellectual, spiritual experience. That’s the explicit expectation of their marketing/sales transaction.
Why Soft Sell? Because their marketing message cannot drive a hard linear line. Language like “insane profits,” “killer copy,” and “crush your competition” just doesn’t work.
Imagine you are a nutritionist, or a life coach, a home-school curriculum provider, or a family financial planner, your message has to be inclusive, appreciative of the emotional problem(s) your customers face. The connection your message creates cannot be just the product of a calculated marketing technique, because Soft Sell is not a case of learning to fake sincerity so you can close the deal. Your marketing must be expressed and experienced as a sincere, authentic connection — emotionally, intellectually, spiritually — because what you offer is a qualitative change in your customer’s life experience, and they need to feel you, believe in, and trust you to permit your influence into their lives.
That change has nothing directly to do with making money — although your customer may make more money as a result. But that’s not the explicit objective of the ROE transaction. The distortion arises when the marketer unconsciously views the exchange from an ROI perspective and the customer does not. That’s a mis-measure of what is happening.
The Bottom Line
The fact is there are two bottom lines:
1) Making the sale – there is no point if the sale is not made. But the sale is the tactical, in-the-moment accomplishment;
2) Creating and sustaining the relationship – if the relationship is not sustained then every sale is the equivalent of starting from scratch.
Traditionally, the art of marketing focused on creating a need that was fulfilled at the sale. And branding became an industry in itself with the intent of transforming customers into loyalists. But ROI was the driving intention throughout, and it didn’t matter what kind of product was being sold.
The ROE Soft Sell provider and customer bring a new point of view to the transaction insisting that marketers add a whole new dimension to their marketing mindset.
About the Authors: Judith Sherven and Jim Sniechowski have been marketing online for three years. Prior ro that they created a successful therapeutic practice in Southern California. Currently they are the producers of “Bridging Heart and Marketing,” the only Soft Sell Internet marketing conference. Find out more about Soft Sell marketing by going to: http://www.bridgingheartandmarketing.com