Marketing departments in the industrial sector are under unprecedented pressure to demonstrate a significant return on marketing investment (ROMI) for their initiatives. This often leaves marketers dwelling on questions such as: How much did this e-mail campaign contribute to the bottom line? How much revenue did that banner ad produce? But these might not be the best questions to be asking.
While it makes sense to consider ROMI when creating marketing plans and campaigns, it’s highly unlikely that any single campaign or tactic can be correlated on a one-to-one basis with a sale, especially in industries with long and complex buy cycles. Yet many marketers will drop a marketing program that doesn’t have sales associated with it. This may be a mistake, and may lead to abandoning programs that are making effective contributions to your thought leadership, brand awareness and other components of your overall marketing strategy.
Marketing ROMI and the Buy Cycle
The reason it’s so hard to correlate sales to specific campaigns has to do with the nature of your customers’ buying cycle. The industrial buy cycle is often long and complex, involving multiple stages, from needs assessment to a final purchasing decision. In the vast majority of cases, buyers will interact with your company many times and through multiple channels before they make a purchasing decision.
For example, they might first generate a lead for your company when they download a white paper offered in an e-newsletter advertisement. Then perhaps they register for a Webinar to see a product demo. They watch a video featuring your product manager. Or stop by your virtual booth at an online event. They search your online product catalog by specifications and compare several of your products side-by-side. They typed in your company name into a search engine to get your contact information when they were ready to buy. Finally, they begin a conversation with your sales team.
The point is that the e-mail ad, the Webinar, the video, the online event, and the product catalog are all components of your broader marketing plan. They exist as parts of an entire ecosystem of campaigns and customer touch points, and it’s almost impossible to attribute a sale to just one of these campaign tactics although they all contributed to this engagement opportunity.
Where to Focus
So what does the marketer under pressure to demonstrate ROMI do?
First, shift from thinking of ROMI in terms of sales tied to specific campaigns and instead focus on what marketing’s role is and whether your department is fulfilling its role. In relation to ROMI, take into account everything that marketing might be responsible for: raising awareness of your company’s brand among your target audience, positioning your company in a competitive marketplace, engaging and qualifying prospects, providing relevant content at each stage of the buying process, supporting your sales team, and much more.
How are you performing at each of these marketing functions? One way to measure your success is to define ROMI at the campaign level in terms of goals rather than revenue. Each program probably contributes only one (important) metric of the overall marketing and sales momentum needed to find prospects and nurture them throughout their buying cycle until the sale is made.
That metric might be impressions, or clicks, or downloads. Or inquiries, requests for proposals, Webinar registrations, etc. Example: a prospect interacts with your product manager during an online event. This and other interactions help to demonstrate the value of the event as a component of your overall marketing mix. If the prospect became a customer at some point in the future, you can tie the event into the conversion of this engagement opportunity to a sale.
This will also help you avoid making a variation of what’s known as the “last click” mistake, which attributes a sale to the last marketing-related touch point a customer has before making a buying decision. It’s a mistake because the buy cycle includes many campaign touches that cumulatively add up to help achieve a sale.
For example, a prospect watched a product demo video in September, downloaded a media kit in October, visited your booth at a tradeshow in November, and bought from you in January — you would count all of these “lead events” as part of the conversion.
So it’s okay to focus on ROMI, but keep it in perspective, and keep it relevant and related to goals. If each campaign is contributing in a defined and measurable fashion, then the overall marketing mix is likely performing as desired.