Ask the Board – September 26, 2016 | MARGOT MYERS

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Is Return on Investment (ROI) or Return on Objective (ROO) ultimately more important and why?


The answer is an unequivocal “It depends.” Different businesses are driven by different metrics. If revenue drives business decisions in a company, then ROI will be the primary factor. That is a situation where careful upfront budgeting and conducting a pilot will likely be required in order to more accurately assess whether a digital signage network will generate the projected and required revenue. If the system can’t prove its worth during a pilot, getting additional funding to expand will be problematic. Retail is a perfect example of a network where ROI is probably most important. If a digital signage network is installed in a store, will there be resulting sales lift in promoted products? Will digital displays in the windows facing into a mall result in more customers coming into the store? Is the impact enough to justify the cost in a reasonable period of time?

When the metrics are not tied specifically to revenue, then ROO often takes precedence. No company wants to throw money away, but there are a variety of metrics for which the key factors don’t involve generating revenue. Some examples of the kinds of metrics that digital signage may impact to improve ROO include: increased customer satisfaction; improved employee business intelligence; increased reach for real-time employee communications; or, educated customers about self-service options (e.g., airline check-in kiosk) or basic information (e.g., way-finding display) offered that ultimately reduces labor requirements or allows employees to focus on more complex customer service needs.

There is no hard and fast rule about whether ROI or ROO is more important. In some situations, it may be a combination of both. This is why it is always advisable to define the objectives for the network as the first step in the process. Reviewing the company’s annual report or strategic plan is one effective way to figure out what is most important to the organization overall. That helps set the objectives that ultimately determine if the priority is ROI, ROO or a combination of the two.

About Author

Director, Global Marketing & Communications
The Platt Retail Institute

MEMBER OF THE DSE ADVISORY BOARD
Industry Consultants Council

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