Marketers of all kinds agree that they’re under pressure to demonstrate ROI on their investments. While this is necessary to avoid wasting resources, marketing ROI can be difficult to measure, even in today’s digital-centric world.
To improve your ability to measure ROI—and to gain the insight you need to make meaningful adjustments to your marketing programs—follow these tips:
Define what marketing ROI means to your organization
Every marketing organization has its own unique vision for and definition of success. The first thing you must do is agree upon and document your key performance indicators (KPIs).
Even within your organization, definitions of success may vary. For example, the chief marketing officer may be interested in cost-per-qualified-lead, whereas a content manager might define success by the number of downloads or shares of content. When having the ROI discussion, make sure multiple stakeholders have their voices heard.
Use marketing automation
If at all possible, take advantage of the low-cost marketing automation solutions on the market today. They will help you keep much better track of campaigns and prospect activity, making ROI measurement a lot easier and your overall marketing efforts more efficient.
You can still get the ROI job done with spreadsheets if you keep your definition of success and metrics simple. However, your task will be more manual and cumbersome and your results perhaps less accurate.
Beware of the single attribution methodology
The simplest and easiest way to measure ROI is to assign the revenue from a deal to the first point of contact a customer had with your company, and then calculate ROI from there Here is an example of single attribution: A prospect downloads a white paper and you add that lead source to their record. Eventually they purchase. The sale is then attributed to the white paper campaign.
Another method is to attribute revenue to the “last click” a customer has or the last action they took before buying, under the reasoning that this is what finally motivated them to buy. But single attribution, whether it’s first touch or last touch, has severe shortcomings, including:
- It doesn’t account for the way most engineers and technical professionals engage in the buying process. Engineers typically have multiple contacts with a company over a period of time, with each touchpoint helping the buyer move closer to making a buying decision.
- Single attribution gives too much credit to lead generation programs and not enough to lead nurturing touches or individual contributions from your sales team.
- Results can be skewed by deal size or time. A particularly large deal would make the attributed source appear wildly successful. A long sales cycle might diminish the importance of the single source.
Account for multiple touches
A more accurate and defensible method of measuring marketing ROI is to account for multiple touches with a prospect over what could be multiple different campaigns. Here’s where your marketing automation helps a lot, as complexity of measurement increases.
In multi-touch attribution, you track every touch made with a prospect along their buying journey. For example, Prospect A from Company X may have attended a webinar, clicked on an e-newsletter ad, watched a video, and downloaded a spec sheet. That’s four distinct touchpoints before a purchasing decision was made.
You could attribute one-quarter of the revenue to each of these four campaign tactics. More likely, you might choose to weight some touches over others based on when they occurred in relation to the sale or the action that delivered value—but beware the “last click” mistake.
You also might give more weight to programs that touched the key decision maker than programs that affected other influencers. Or you might choose to weight certain types of touches more heavily than others based on the level of engagement. For example, attending an hour-long seminar may have more impact than a simple website visit. How you weight touches is entirely up to you.
Multi-touch attribution for calculating ROI offers a number of benefits:
- Accounts for longer-term nurturing touches as well as lead generation.
- Especially useful for long buying cycles that include multiple prospects and many touchpoints.
- Focuses on all contacts and touchpoints associated with a deal, not just the first or last.
While multi-touch attribution for calculating ROI has significant advantages over single attribution, you should be aware of potential pitfalls and how your findings might be challenged:
- You have to make assumptions based on weighting touches, and your assumptions could be wrong. On the other hand, if you weight all touches equally, you run the risk of over-crediting low impact touchpoints.
- It’s still difficult to account for “hidden” contributors, including sales activity and unattributed online activity.
Accept a learning curve
It’s a challenging task to measure marketing ROI, but you must do it in order to justify budgets and optimize expenditures. It will likely take time to get good at ROI measurement, but you are not alone. According to a MMA/Forrester/ANA study, 87 percent of senior marketers did not feel confident in their ability to impact the sales forecast of their programs.
The most important aspect of measuring ROI is to get everyone on the same page in terms of how you define success and what measurements contribute to determining your level of success. From there, move forward as your skills and tools allow, always focusing on improving your methodologies, increasing your confidence in your results, and adjusting programs based on data.