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MROI: The Marketing Marshmallow Test

Oct 27, 2021

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There is a tremendous focus on measuring ROI/MROI for everything in the marketing, research, CX, and advertising sectors.

Not a lot of discussion on when to start calculating it.

The famous Marshmallow Test — if you’re not familiar — was an experiment conducted at Stanford to test delayed gratification. Small children were asked not to eat a marshmallow for 15 minutes in return for a second marshmallow if they were able to wait—doubling their reward.

So many marketers are eating the first marshmallow. We’re so focused on persuading the stakeholders that what we are planning to do will have merit that we’re cutting ourselves off at the knees and preventing the real large-scale change that will have a much bigger impact.

This is what naturally follows single-minded reliance on ROI as a fast metric for success, and it constrains your initial investment because a larger investment will naturally take longer to see a return – and people are often too scared to wait that long.

Two things:

  1. If you focus on short-term ROI, you are restricted to two primary activities: generating new leads and/or improving efficiencies.
  2. Great leaps forward are likely to reduce ROI in the short term, not improve it – risk and investment will increase, as will the potential for long-term ROI.

#2 can be mitigated by generating leads and improving efficiency, but probably not to the extent of reversing it.

If you want transformative CX or marketing work, that takes a big investment, and it probably means transmuting your business to an extent. If you try to start calculating your ROI too early in that process, you will conclude it is a failure — before the plane has even gotten off the ground!

That’s not to say don’t measure progress or return. But the whole point of really good research, CX, and marketing work is to find out something you don’t already know. You can’t measure the bottom line impact on an unknown until you know it.

If your first metric is ROI, not customer satisfaction, or innovation, or operational improvement, or reaching an entirely new market segment, or moving your brand platform substantively forward, then your ROI increases will be incremental, not logarithmic.

The time to start calculating ROI on a truly transformative project is after it’s cooked. If you make major improvements to your customer experience, and those are honest improvements, not cosmetic, ROI will start to show up on a bell curve as those improvements are socialized through your audience — and on a steeper bell curve when you are able to effectively market that improvement.

There will be – of course! – access to quicker metrics about whether what you’ve chosen to do is actually working – happier customers, increased brand awareness, top of funnel population increases, earned media, reduced cancellations, fewer customer service calls – including some that show improvements to a bottom line. And with adequate research and strategy, the risk is greatly reduced. But you still won’t see an actual return – the project in the black – until you’ve gotten some traction across lots of other dimentions.

Calculate ROI, sure. But if that’s your first metric, your leading metric, and it takes precedence over the big ideas that would give you a real springboard into the future, you’re sacrificing that second, future marshmallow in favor of smaller immediate rewards.