Three R's of Marketing Measurement:
How ROI, ROO and ROE change the way we spell success

By Randee Gannon

(September 2009) -- For as long as I can remember, we marketers have tossed around the words "return on investment" or "ROI" as a means to measure the financial impact of a marketing promotional effort.  Because tracking ROI has always been hard work and elusive due to its reliance on directly correlating patient utilization to the marketing initiative, implementation in the healthcare industry has been challenging.  So, over the years, ROI in healthcare has evolved to be a blanket term used to reference the process of developing a reasonable measurement system supported by any available data rarely tied to revenue or costs of services.

Consequently, I was inspired when a presenter from a recent gathering of local healthcare marketing professionals validated this evolution – and went on to talk about the benefits of tracking ROO, or "return on objective," when calculating true ROI isn’t possible.  Light bulb!  Not because I hadn’t thought of or executed the measurement of nonmonetary metrics – but because now there is now an official name for it!

Since then, I have also discovered how to incorporate the use of ROE – "return on engagement" - used primarily in the social media world.  Once again, a measurement we have all been tracking – but calling it ROI.  Using the correct vernacular in our performance metrics now allows us to legitimately measure and report the success of initiatives that contribute to and are as vital to a company’s success as the bottom line. A primer:

Return on Investment (ROI)

• What is it:  The measurement of campaign success based on financial return.  The mathematical formula used in healthcare is called "Effort ROI:" the net revenue collected from patients determined to have come from a specific marketing endeavor less a factor for "costs of services sold." Here’s the actual formula:
  
  

  	Net revenue - marketing expenses
  ROI =		X 100
  	Marketing expenses

  
  
• Answers the question:  Did I go to J-school for this?  Just kidding!   At the end of the day, are my dollars in greater than my dollars out?

Return on Objective (ROO)

• What is it:  The measurement of campaign success based on achievement of predetermined, nonmonetary goals.
• Answers the question:  For example, did I generate awareness, improve participation or increase usage?

Return on Engagement (ROE)

• What is it:  The measurement of involvement in social media based on online interactions and relationships.
• Answers the questions:  Is my audience getting what it wants out of our online conversation? Am I getting what I want out of our online conversation?  In other words, are my friends/followers finding value in my online engagement, shown by retweeting, commenting on, or subscribing to my updates?  And am I building relationships with my online audience based on their responses?

Naturally, the three R's should tie together, as in this example:

A hospital creates a Facebook page and develops a following of 50 fans.	ROE
The hospital then creates a Facebook event for a community health fair to complement traditional advertising efforts and 20 fans RSVP to the event.	ROE
100 people attend the health fair.	ROO
5 people who attended the health fair became new patients of doctors they met at the fair.	ROI
2 of those new patients become patients of the hospital.	ROI

Now that I "connect the dots" for clients, I love this new way of thinking - and packaging - the return of marketing efforts.  I am grateful to the agency that shared their "light bulb" experience – and I can't help but wonder if they have calculated the ROO on their presentation.

Questions?

To learn more about how to incorporate ROO and ROE into your marketing initiatives, contact Randee Gannon at 816.753.3336, ext. 342.

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