How Long is a Marketing Piece of String?
Even though a recent survey by IBM revealed that 63% of the CMOs surveyed think that ROI will be the primary measure of their effectiveness by 2015, the same survey revealed that 56% of them also feel inadequately prepared to manage ROI. This isn’t the only survey to reveal that proving ROI is foxing marketers; research by the Aberdeen Group and YouGov has revealed similar statistics.
One of the biggest challenges in proving marketing is agreeing on terminology – what exactly constitutes a good ROI result? The jury’s still out.
Here are some ways of measuring…
1. Against the industry benchmark
This is an easy measurement to make with marketing automation software. But does it really tell you what you need to know? Surely the ROI on your campaigns is all about the value it brought to your business – the number of leads you generated, the number that were accepted by the sales team, the amount that converted, the revenue they generated. Comparing this to external stats gives you a good idea of how you perform compared to others but, in our eyes, that’s not really what ROI is about.
2. Against what you spent
This is a good measurement, as you definitely need to know if your campaigns are generating less revenue than they cost. However, this is very hard to quantify with any real clarity. A lead may have engaged with you at the start of a campaign, but may not actually buy until several months later - by which time they will have had multiple touch-points with your company and the resulting deal may not get recognised as having come from that particular campaign.
So can you really judge the ROI on this criterion? We would say no, if you’re being judged on actual revenue generated. But if your goals were number of leads of a certain score with a certain value by a certain date, this could be a valid measurement.
3. Against what you got in the same month last year
This measurement is the Google Analytics gold standard! While it is a good indicator of year-on-year performance, we have all witnessed in recent times that the world can turn upside-down in 12 months. So while it’s good to know, it’s not really a good metric to establish the ROI on the campaigns you’re running now; which will more than likely have cost a different amount, have different products/services/offers highlighted and be targeted at different market segments to previous campaigns.
4. Against what your boss expects
It’s a fact of life that we all need to deliver what our managers expect. Surprisingly, this is probably the most valid measurement metric of all. Each campaign should have defined objectives that it needs to achieve. The ROI should be defined at the start with your boss based on these. With marketing automation, you can input these goals, track progress against them and nurture your leads towards your ultimate aim – then create reports to show exactly what ROI you delivered.
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