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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Return on Ego (ROE) vs. Return on Investment (ROI)

Written By: Carol Roth | Comments Off on Return on Ego (ROE) vs. Return on Investment (ROI)

Back in the 1980s, Madonna told us that we were living in a material world.  Now, we are living in an ego-driven world, where recognition and fame not only give you some semblance of status, but also a bit of a high.  However, the pursuit of ego is sort of a gateway drug which, like other drugs, seems glamorous, but can have dire consequences.

Running a business on ego

Many entrepreneurs start a business based on ego.  They want to pursue a passion, escape direct rejection from job hunting or think that they are smarter and can do it better.

Even if ego wasn’t your initial motivator, it can interfere when running the day-to-day operations of your business.  Social media enables the pursuit of what I have coined “ROE” or Return on Ego- instead of “ROI” or return on investment.

There is a temptation to get sidetracked by getting more “likes”, followers, page views or subscribers, but realize that those are only a means to an end.  Until we can pay for goods and services in Internet status, that alone isn’t enough.  I have yet to meet a business that accepts payment in the form of “followers” or “re-tweets”.

You want to put out a tweet.  You want to make a video that goes viral.  You want to build your mailing list. You want to be on television or the radio. But why?  It better be related to making money (or even securing your job) or you are jeopardizing your ROI for ROE.  Then, you also need to make sure that it is the most effective way to help you make that money.

Start with your objective- to sell your product, service, broadcast, etc.  To do that, you need to find new customers and engender loyalty from existing customers.  That is the context to evaluate activities and tactics that you pursue on behalf of you as a professional or as a business owner.

You need to ensure that the activity meets the ROI objectives and that it does it better than anything else you can be doing.  It may be glamorous and feed your ego to write for a high-profile media outlet on a regular basis, but does it get you business on an ongoing basis?  Or would you be better off spending time doting on your existing customers and building strategic relationships?

Be careful of the pursuit of ROE or you may end up with a lot of Google links and not a lot of cash in the bank, and only one of those can pay for goods and services.

How can you check when your ego might be driving your decisions?

Article written by
Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett (Shark Tank, The Voice, Survivor, The Apprentice) produced technology competition series, America's Greatest Makers, airing on TBS and Host of Microsoft's Office Small Business Academy show. Previously, Carol was the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country, and a contributor to CNBC, as well as a frequent guest on Fox News, CNN, Fox Business and other stations. Carol's multimedia commentary covers business and the economy, current events, politics and pop culture topics. Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011-2015) and has her own action figure. Twitter: @CarolJSRoth