Return on Investment: Time vs. Money
Return on Investment (ROI) is probably one of the most common KPI's when it comes to a monetary spend. We put X amount of money into a project with the intent of having MORE than X when we're done.
It's a good metric.
So, why are we only using it with regard to a NEW investment?
Businesses spend a lot of money. On salaries. On marketing. On tools. On travel. On office space. On trying to look bigger than they are. On memberships no one uses. On credit card processing fees.
But more than the MONEY spent, businesses spend a lot of TIME.
Time creating content. Time searching for new leads. Time learning new tools. Time traveling to and from the office. Time in training that doesn't move the company forward. Time dealing with customer complaints that could have been avoided in the first place with the correct intention.
This is what we spend as humans. Money and time.
So, what if we expanded our use of the ROI calculation to more areas of the business?
For the sake of this article, I'm going to focus on Sales and Marketing, but feel free to extrapolate the examples here to other departments as well :)
The Return on Investment Formula
Just to make sure we're starting off on the same foot, here's the ROI formula:
R = (Vf-Vi)/(Vi)
R = Return
Vf = final value, including dividends and interest
Vi = initial value
With that, let's get started.
Money is Easy
Let's look at a common way that people might be calculating the ROI on their digital ads. Usually, what companies look at is the cost of distributing the ads (what Google, or Facebook charges you), and the amount of income from clients who purchased through the ads.
But is that all that goes into the initial value? What about the time it took for someone to create that ad? Or research where to promote it? Or creating a target customer profile? And how much you paid someone to do those tasks.
Once companies are paying people a salary, they often forget this type of information. They ignore the TIME that goes into the activity, and they just look at the hard cost. But that doesn't give you an accurate reading on your investment.
Why Time Matters
There are a couple reasons why time matters in the ROI equation.
Companies are paying people for their time
When employees spend a lot of time working on things that DON'T contribute to the company in any way they can see, it impacts employee engagement.
I use to spend almost 100% of my time working on activities that didn't directly impact the business. And I was a Vice President of Marketing.
Glassdoor reports that the average salary of a Vice President of Marketing in Canada is $193,180. I also had a Marketing Coordinator (estimate $55,710 for that). That's a business cost of almost $250,000 for marketing staff.
Let's add a $500,000 marketing budget to that (which would likely be small for a company paying that much to their VP). That's $750,000 that, if we're looking at the ROI calculation COULD yield MORE than that in returns in a year.
But most businesses don't think that's possible. So they spot measuring it.
We measure results on the $500,000 only. But even if you make $650,000 on that $500,000, you're LOSING money in your marketing function.
And sales TIME is probably even MORE relevant in the overall numbers. Yet it's not being accounted for in the equation.
So, how COULD we account for it in the equation? To boost both our salary effectiveness AND how our employees feel about spending their time contributing?
An Example
Most of us spend time doing things. But if the things aren't contributing, then WHY are we spending time doing them? Because we're not being conscious of the Return on our Time Investment.
So, let's layer that on top of the monetary ROI.
Let's look at the time that goes into creating a corporate blog post (based on my past experience):
A content creator takes X1 amount of time to create their content
An approver takes Y amount of time to review it
The creator takes X2 amount of time to update it
A posted takes Z amount of time to post it according to the posting strategy
Now, in my experience, that's going to be about 5 hours of time in total (if everyone is super good a their job and the creator is an average writer based on statistics from Orbit Media).
Now, let's take that marketing coordinator salary (even though some of the people in the chain are likely paid more), which breaks out to about $29 per hour. So, we spent $145 creating that blog. Now, if no one READS that blog, was that a good way to spend 5 hours? Or a good way to spend $145?
And no, I'm not counting those 8 employees who you told to read the blog to make it look like there was traffic.
This might seem like a negligible example, but what if your goal is to write one blog a month. That becomes $1740 a year. And I've know companies to negotiate an annual rate for a digital tool in that ball park, so why wouldn't we review this one?
Everyone is SO busy. Busy doing things like👆
Busy throwing $1740 down the drain. And that's just in ONE activity.
At the end of the day, the point is, the activity DOESN'T MATTER. And if we fill our days with activities that don't matter, we don't feel like we did something meaningful, and we don't grow as a company either.
Spend TIME Doing THINGS that MATTER
So, what DOES matter in your marketing and sales efforts? Do you even know?
What things do your team mates feel like make a difference? In their day? And to the company?
Have you asked them?
Do you know how they spend their time?
If you've been going to the same trade shows for 4 years and you've never made enough from a client to cover the COST of them, little lone the time spent prepping them, it's NOT a good way to spend your time.
Literally, you could just STOP going, save all that money, and it would make no difference on a marketing or sales front.
Saving you and your team TIME to explore things that might actually matter.
A Culture of ROI
If we're doing a good job spending time on the things that matter, we're actively CREATING ROI. We're not waiting for it to be delivered by someone else.
We're not crossing our fingers and hoping the ads add up.
We're not rewarding our sales teams for NOT booking meetings.
We're not losing our best employees because they're too busy doing things that don't drive the business.
Too often we think that marketing and sales are just a "cost of doing business". And they are, if you treat them that way. But marketing and sales activities PAY for the rest of your business to exist. And if they aren't doing their job, no one else gets paid.
If you're interested in shifting the dialogue within your sales and marketing teams from spending time doing things to spending time doing the things that MATTER, let's chat 😊
Bonus Resource
I doesn't have to be hard to track the time associated with your business activities. It does take intention though. It's easily done with an app like Harvest.
