At the time of writing, we are in «budget season,» and it is more important than ever to focus on resource allocation and prioritising activities that yield a reasonable return on investment (ROI). This requires a clear understanding of which activities truly drive our value creation, along with the resolve to cut those that don’t.
One of the key insights we can have as leaders is understanding which activities have the greatest impact on our operating profit. We can assess this in various ways, such as through cost efficiency or customer loyalty: it is significantly less costly to retain an existing customer than to acquire a new one. According to research from Bain & Company, even a small increase in customer loyalty can lead to a significant boost in profitability. This shows the importance of focusing on retaining customers through long-term relationships, excellent customer experiences, and loyalty programmes.
Sales-driven vs. brand-building activities
When considering how to use our marketing budget, we must ask ourselves whether the activities we invest in truly deliver measurable impact. Branding can be valuable in the long term, but it can also be a costly and time-intensive investment that does not necessarily yield noticeable returns in the short term. This does not mean that branding should be deprioritised entirely, but rather that we must balance our efforts between short-term sales-driven activities and longer-term brand-building.
For example, a campaign aimed at converting leads to customers through digital ads or email marketing may deliver a faster and more measurable ROI than a general branding campaign. At the same time, we must remember that a strong brand can create long-term value by building customer loyalty and attracting new customers organically, which in the long run can reduce the need for continuous investment in paid marketing.
Essentialism
We can draw inspiration here from the philosophy of essentialism, as Greg McKeown describes in Essentialism: The Disciplined Pursuit of Less. Essentialism is about identifying what truly matters and eliminating everything else that drains time, focus, and resources. In context, this means analysing which projects, products, or services no longer contribute to growth, and then being tough enough to cut them. This may also mean streamlining complex organisational structures, trimming down inefficient processes, and reallocating resources to support core business functions.
«Kill Your Darlings»
The term «kill your darlings» originally comes from the world of literature, where it means removing parts of a text that the writer may love but which do not contribute to the overall story. In business, this principle is equally relevant, especially when we have to make tough decisions about discontinuing projects, products, or work processes on which we have spent time, money, and effort, but which no longer contribute to the company’s overarching goals.
It’s easy to become emotionally attached to certain projects or initiatives — perhaps because they have been a significant part of our history, or because we have invested considerable time and effort in them. However, just because something has worked before doesn’t necessarily mean it is right to continue. This is particularly important when we are aiming to secure optimal ROI.
For instance, a particular product line may once have been a revenue driver but now demands more resources than it brings in. Or perhaps a marketing strategy that previously generated significant attention no longer delivers measurable value in terms of sales. Holding on to such initiatives can be costly and diverts resources from activities that could yield greater returns. Here, we must be willing to «kill our darlings,» even if it means letting go of something central to us.
Taking this step also shows our organisation that we are adaptable and proactive. It sends a signal that we prioritise the company’s growth and profitability over sentimentality. This is a challenging but crucial exercise to streamline the organisation to focus on what genuinely creates value, so we can direct resources towards projects and initiatives best suited to our future needs.
How do we prioritise correctly?
To prioritise in a way that ensures the highest possible ROI, we can use the following steps:
Analysis of core activities
Start by identifying which activities directly impact the company’s revenue. Examine data from sales channels, customer behaviour, and market trends. What do our customers value most, and what generates the highest margins? What are we currently doing that could be cut without diminishing the quality of our customer offerings? This helps us define where our efforts should be focused.
Evaluating the cost of acquiring new customers vs retaining existing ones
Set specific targets for customer retention and measure results over time. By strengthening loyalty through personalised service and customer support, we can reduce churn and increase the lifetime value of each customer. Customer satisfaction surveys and feedback are valuable tools in this process, providing insight into areas that need improvement to maintain loyal customers.
Focus on low-hanging fruit in sales-driven measures
Identify the most effective sales channels and review which campaigns have delivered the best results in the past. Often, it is possible to increase efforts where we already see success. For instance, if online marketing proves to be the most profitable channel, we should allocate resources to optimise it further before spreading to other, less effective channels. The same applies to geographical markets — can we achieve better results by focusing more strongly on a market where we already have a high market share before expanding into new areas?
Consequences of lack of prioritisation
Spreading ourselves too thinly is a high-risk strategy. If we try to be present everywhere without sufficient resources to do it well, we end up weakening our market position. When resources such as time, money, and human effort are limited, we must dare to say no. Continuing to invest in projects or products that do not yield positive returns is one of the biggest mistakes we can make. This also applies to internal processes and teams. An inefficient organisational structure can be as much a cost driver as external activities, and adjustments are necessary to ensure we have the right staffing for our most value-creating activities.
The human factor
Implementing such prioritisation can be challenging in practice. It requires not only strategic decisions but also that we, as leaders, are clear and transparent in our communication. When we reduce costs or discontinue projects, it can create uncertainty within our teams. Here, it is crucial to communicate why these changes are happening and how they will help strengthen the company going forward. This creates a culture where people understand the value of focus and see their role in contributing to the overall strategy.
Three concrete actions to secure optimal ROI
Regular portfolio review
Once a quarter, we should review all ongoing projects and campaigns to assess their impact on our revenue. Is there anything that no longer makes sense? By making this a regular routine, we can quickly identify and cut initiatives that no longer have value.
Measure customer satisfaction and loyalty
Use customer satisfaction surveys to gain insights into what creates value for customers. These insights can help us improve our services and products and identify which customers are most valuable to the company.
Balance between short-term and long-term goals
Allocate a larger portion of the marketing budget to direct sales-driving initiatives such as digital advertising and optimising sales processes, but also retain some investment in long-term brand building. This balance gives us a stronger position both in the short and long term.
Prioritisation is the key to growth
Securing optimal ROI is about more than just cutting costs — it is about investing our resources where they can do the most good. This requires a clear strategy, focus on core activities, and a deep understanding of what drives customer value.
TL;DR:
To ensure optimal ROI, we should focus on retaining existing customers rather than always chasing new ones, prioritise direct sales-driven activities over costly brand-building, and implement essentialism principles to eliminate activities that do not provide measurable value. This also involves having the courage to “kill your darlings,” even if it means letting go of projects we are emotionally invested in, but which no longer contribute to growth. This leads to more efficient and profitable operations that provide both short-term and long-term gains.
