Monthly Archives: February 2012

ROI

ROI (Return On Investment): “A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.” — Investopedia definition of ROI.

Marketing people don’t know accounting. We don’t want to know accounting. Accountants are the villains, the inveterate naysayers. In the movies, accountants are the boring boyfriend or the bean-counting toady. But when a lazy Hollywood writer wants to give his hero a profession, right there in the “heroic professions” grab bag next to screenwriter and Navy SEAL is — ad man. Yes, we “creative” types are pretty smug. We’re brainier than salespeople, more fun than finance people and better dressed than operations people. And we don’t have to show results (much). Books off at month-end? Then as an accountant, you definitively, undeniably suck. Sales down from last year? No commission for you! Marketing plan not a barnburner this year? Define barnburner. Oh, and the economy stinks. What’re you gonna do?

But what the “soft” fields truly envy in the “hard” fields is the jargon. Percentile, delta, impedance mismatch! Gloriously thick words made more desirable by their impenetrability. We must use them. Definitions be damned! …What? What’s this? Return on investment? Why, yes, I think I understand that. Oh, and it has a snappy acronym, too — ROI. No no! Don’t tell me what it actually means. I don’t care what you CPAs think. I like it.

Being left-brained number-crunchers, you don’t see the possibilities here. ROI sounds so official, so — profitable:

“We’re seeing great ROI in our social media campaigns.” (We have three new Twitter followers.)
“Our services demonstrate appreciable ROI for our clients.” (ROI can be negative? I’m wetting myself with excitement!)
“I’m not convinced of that program’s ROI.” (See what I did there? Can I order a CPA certificate online?)

Why confine ROI to a boring formula? Let me have it for a month and I guarantee it’ll be meaningless when I’m done with it. Look on the bright side. When ROI means nothing more than “effectiveness,” then you can stop obsessing over that discrepancy in year-end close. That’s what they’d do in the movies.

Otto E. Mezzo