Tuesday, November 6, 2007

The Truth, the Whole Truth, and Nothing but the Truth

or... What is your return on "marketing integrity?"

A Yankelovich study a few years ago found that as many as two-thirds of Americans believe that businesses would take advantage of the public if those businesses did not think they would be exposed. As many as one-fourth of Americans agreed that there is literally nothing that business can do to recapture their trust once it is lost. ("State of Consumer Trust," 2004).

Most marketers may be honest in the sense that they do not blatantly lie or intend to mislead, but the definition of "honest" is shifting to a higher realm since customer loyalty (and trust comes before loyalty) is at a premium. Traditional Return On Marketing Investment is calculated using Gross Margin generated by marketing efforts (GM), minus the Marketing Investment (I), divided by that investment: ROMI = (GM - I) ÷ I. The calculation for return on marketing integrity is identical, except that investment is replaced with marketing integrity.

Simple enough to explain, considerably more difficult to measure. An example would be a company investing significant man hours and dollar expenditures ensuring that every marketing claim is ruthlessly checked with R&D for accuracy, then any attitudinal or behavioral gains among customers can be at least partially credited to those investments.

Now, why would a business make these extra efforts? Yes, everyone wants more customers, but is it really worth the time and effort? Yes, for several reasons:

1. Measuring the impact of integrity can help marketers learn some of the reasons why customers are buying in the first place... revealing why they remain loyal will lead to increased profitability.

2. Tracking integrity may uncover new ways to attract more new customers... discovering what your company's unique value proposition is (in your customer's eyes).

3. By regularly comparing integrity performance and financial bottom-line impact, businesses may be able to significantly reduce the unforced integrity erros that have cost other companies brand equity and sales declines... i.e. was "New Coke" really new?

4. Maintaining a sense of marketing integrity can protect brand image when a company is under scrutiny... ex: Enron; 'nuff said.

During a credibility crisis involving the troubled General Re acquisition, Warren Buffet once observed, "Berkshire can afford to lose money, even lots of money; it can't afford to lose...even a shred of reputation." If the Oracle of Omaha can't afford it, neither can the rest of us.

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