Ep 14: A Twist on Marketing Planning: Reverse ROI meets the Dark Side of the Moon
It’s that time of year as many marketers set budgets for 2020. While there are different ways to set your marketing budget, I want to offer up a bit of a twist. Sort of a provocative approach based on three factors: primal habit, marketing investment, and target contribution to revenue.
I begin the podcast by talking about a concept called Reverse ROI. Fundamentally, this concept is based on a simple question:
If you were to spend zero marketing dollars in 2020, how much revenue would you accrue?
The answer to this question is your primal habit line. It is the estimate of how many people buy on habit (or loyalty), therefore marketing does not affect their decision. Clients have different habit lines based on their customers frequency if purchase, and habitual nature. For example, in grocery the line can be 80 to 90 percent, in travel about 50 percent, and low-frequency durable goods can be below 20 percent. In this podcast, I discuss how your marketing dollars are an investment designed to reach your revenue goals by making up the difference between the habit line and goal. It’s an interesting premise worth a listen … but it doesn’t end there.
To achieve the revenue goal, I go a little retro by using Pink Floyd’s the Dark Side of the Moon, or to be more specific visual on the album cover. For those who aren’t familiar with the album cover it is a visual of a prism. This metaphorically represents how most clients must break down their budget to understand how each target contributes to their revenue goal. Think of it this way: the light beaming into the prism represents the gap between the habit line and revenue goal. The different colorful light beams emanating from the prism represents the different targets you need to appeal to in order to meet your goal. In the podcast I detail this approach and use a travel example to bring it to light.
Worth noting is this is an example on how to use a Primal Shopper survey. The survey not only isolates opportunity targets based on different motivation, but it also identifies media and information sources influencing each target’s purchase decisions.