Emotional decision-making has costs that can hurt your bottom line
FOMO, or the fear of missing out, is a psychological phenomenon that can have real effects. Usually, the term is used to describe social lives but it is often seen in business, especially in areas where ROI is prone to ambiguity.
Marketing is one of these areas. Although marketing measurement has grown leaps and bounds in the past decade or two, there are still areas that may not be able to, or are simply not, measured in a company. This makes it easy to make decisions based upon emotion that could negatively impact your budget and your revenue goals. How do you spot it? Here are some classic examples:
- The unproven tradeshow: Have you ever wasted thousands of dollars at a yearly event that has garnered no ROI, but felt pressured to invest in it because a big potential client was attending, or a competitor was a sponsor? It’s possible that your competitors had the same emotionally-driven decision-making processes on their end as well. Do you know who wins? The tradeshow!
- The shiny tool: Has your company switched tools that were working and can’t even remember why anymore? Your company took time and effort to choose, effort to strategize on, and even more effort to set up and maintain a current tool. Just when everything starts humming, along comes a shiny new tool equipped with a bag full of tricks the old one doesn’t have. So, your company switches. Then after you switch your old tool comes out with upgrades that are even better than your new one. Sound familiar?
These are two examples in functional areas that tend to be very expensive, and thus the consequences can be damaging to your bottom line if the risk doesn’t pay off.
While it can seem hard to make these judgment calls in the moment, it is good to force a pause and think through creative ways to rationalize decisions. Let’s explore a few options.
- Building a case for tradeshow investment: I have often reached out and spoken with past sponsors of an enticing event to ask about their experience and results. I have also sent salespeople to “work the event” at a much smaller spend in order to test it the first year.
- Litmus test for a new tool: I would suggest looking back at your evaluation process of the existing tool. This may serve as a great reminder of why you chose it and the problem it was solving. Before switching to a new tool it is good to ask if the existing tool is still fulfilling the actual need
When in doubt with any of these types of decisions, look outside. If you work with a trusted agency or consultant, you could engage them as a source for advice. Consultants often have varied experience and may offer an objective viewpoint or advice on ways to evaluate the options.
At the end of the day, it may be the right choice to invest, but you should truly understand the risk and reward going in. This includes not just the opportunity in front of you, but what opportunities you may be giving up.