cmo's guide to marketing roi
DESCRIPTION
What does it take to move marketing measurement to the next level, and drive your company's revenue growth in a smart way? Jim Lenskold, author of Marketing ROI: The Path to Campaign, Customer and Corporate Profitability, and Jon Miller, VP of Marketing for Marketo help you: Define marketing ROI and optimizing revenue performance Develop KPIs that predict future marketing success Effectively communicate marketing results to and within the C-SuiteTRANSCRIPT
The CMO's Guide to Marketing ROI
Jon Miller VP Marketing & co-founderMarketo(@jonmiller2)
Jim LenskoldPresidentLenskold Group(@JimLenskold)
Page 2© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Topics
• ROI overview• Defining and managing key metrics• Measuring marketing impact on
incremental revenue and profit• Communicating with the executive team
and the board
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Lenskold Group Overview
Lenskold Group founded in 1997
“Marketing ROI” book named one of the 5 most influential marketing books of 2004
Marketing profitability management• ROI Framework • Measurement & Analysis• ROI Tools & Dashboards• Workshops & Training
Leading marketing ROI innovator
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Partial Client List
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
12%
20%
15%
9%
44%
Improve profits by more than 20%
Improve profits by 10% to 20%
Improve profits up to 10%
No major change in profits generated
Don't Know
How Much More Profits With 10% More Budget?
#1 Answer:Don’t Know
Majority of balance: increase more than 10%
2010 Lenskold Group / emediaLead Generation Marketing ROI
Research Study(www.lenskold.com/LeadGenROI)
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© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
ROI Management Process
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Strategy Tactical Plan
Measurement Plan Measurements
Impact & Contribution
ROI Scenarios
ROI Measurement
Test Variations in Plan
Objectives
Best Assumptions
History to guide future campaigns
People, Process, Technology
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
ROI - Scenario Planning & Results Assessment
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Marketing ROI scenarios improve profit potential by comparing alternatives for new campaigns and improvement areas for repeat campaigns
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Effective Measurement Planning
Campaign Measures Establish objectives and a clear plan
for action Plan measures pre-campaign Assess strategies, not just tactics
Performance Management Identify “big win” measurements Integrate diverse methodologies Prioritize based on potential impact
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© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
5 Main Opportunities to Improve ROI
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Initial Prospects
Closed Sales
3. Reduce leakage with better integration
4. Accelerate leakage of low-
potential prospects
5. Gain efficiency, eliminating low impact media
2. Improve conversion later in
the funnel
Closing sales
Customer Relationships
1. Target High – Value / High
– Potential
Strategies, measurements and efforts to improve performance must be prioritized to have the greatest impact on ROI
Topic #1Defining and managing key metrics
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Framework for Marketing Metrics
Performance Metrics & KPIs
Diagnostic Metrics
Leading Indicators
Metrics driving current financial
outcomes
Metrics identifyingmarketing gaps and
weaknesses
Metrics predictive of future financial
outcomes
CompanyPerformance
Aggregate impact across
marketing programs
• Lead quantityversus targets
• Average value per new account
• Purchase Intent• Web visits• Funnel leakage
• Lead to SalesConversion rate versus trend or benchmark
• Sales velocity• Retention rate
Marketing Program Performance
Incremental contribution of individual marketing programs
• Program ROI• Incremental sales• Average value per
conversion• Cost per sale
• Response rates• Sales accepted
leads• # Days Lead Passed
to Sales Contact
• Lead quality (projected conversion and value scores)
Page 11© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Marketo’s Revenue Cycle
All N
ames
Pros
pect
&
Re
cycl
ed
Lead
Awar
enes
s
Enga
ged
Oppor-tunity
Cust-omerSa
les
Lead
MQLSAL SQL
Nurturing Database
Marketing SDR Sales
Page 12© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Revenue Cycle Modeler
Marketing SDR Sales
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Filter/Drill into data, e.g. by Program Type, Business Unit, Geography, etc.
Key topic areas:• Balance• Flow• Conversion• Velocity
Trends over time
Page 14© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Marketo Revenue Cycle Metrics
Opportunities 130 / mo($2,000)
New Customers($5,800)
Leads2,000 / mo($137.50)
Prospects3,800 / mo¾ paid ($73)
¼ unpaid ($0)($55 average)
20%Active Prospect
Database
4.0% / month 75%
Paid Names
($29.33)
10%UnpaidNames
($0)
40%Inactive (Last 6
Months)
34.5%
40% of prospects eventually become a lead
Lead Type Variants• Source• Channel• Division• Size
80%
80% of all deals follow this model • Lead to Sales Lead: 7%
• Sales Lead to Opp: 80%• 1.4 people per Opp1,000 Leads = 40 Opps
9,500 / mo
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Poll 1
Which statement best describes your approach to marketing metrics? (choose one) Don’t have standard marketing metrics Use basic marketing metrics such as lead quantity,
response rates and web traffic Use business outcome marketing metrics such as
opportunity conversion , sales conversion and revenue contribution
Use business outcome metrics noted above and also forecast opportunities, sales and revenue for upcoming periods
Topic #2Measuring marketing impact on incremental revenue and profit
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Marketing Performance Measurement
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Methodology Use Pro ConSingle Attribution 45% Easy and low cost Ignores impact of
other marketing
Attribute Across Multiple Programs
21% Incorporates multipletouches over revenue cycle
Assumptions addbias
Test and Control Groups
11% Reveals the true impact of a marketing program
Limited use; requires marketing exclusion for control
Market Mix Modeling
3% Effectively attributes sales lift by tactic and influence of non-marketing factors
Requires resources (budget or staff),detailed data and variance
20% use No Tracking or Measures
Source: 2010 Lenskold Group / emedia Lead Generation Marketing ROI Research Study(www.lenskold.com/LeadGenROI)
Page 18© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Prospect Generation 2H2010Source Prospects Cost %
LeadVelocity(Days)
Lead to OppIndex
Trade Show – Virtual 3,793 $25.44 17% 81 1.03rd Party Email Blast 3,302 $34.65 18% 43 0.5Trade Show 2,703 $221.30 23% 61 1.9Paid Webinar 1,760 $68.50 21% 60 1.0PPC 990 $158.10 45% 42 1.4Content Syndication 536 $82.84 12% 59 0.3Other Paid 208 $187.50 13% 93 1.3Website 2,871 58% 27 2.6Sales Prospecting 1,888 26% 46 2.2Partner Co-Marketing 903 17% 102 1.1AppExchange 353 78% 37 3.4Referral 80 36% 12 1.0Other Inbound 370 100% 19 9.0
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Programs Analyzer
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Track All Touches Across People
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Allocation Methodologies
• By Time• By Role• By Program Type
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Poll 2
Which of the following measurement challenges are currently barriers for your organization? (choose all that apply) No measurements in place Track lead quantity but no measure of sales conversion No measure of marketing impact on revenue per sale No measure of the impact of multiple touch points No use of market testing or control groups Marketing and media data not consolidated for modeling or
analytics Difficult to assess impact of long sales cycles
Topic #3Communicating with the executive team and the board
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Dashboard Provide Clear, Consistent Insights
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Metrics vs. Goals Trends AlertsSelect Details
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Demand Generation Forecast
Leads Oct Nov Dec Jan Feb Mar Apr MayPlan 1434 1512 1581 1990 2000 2060 2127 2195Oct 1570 1370 1600 1605Nov 1245 1400 1500 1612Dec 1536 1990 2000 2060Jan 2631 2000 2060 2127Feb 2609 2300 2350 2450
Opps Oct Nov Dec Jan Feb Mar Apr MayPlan 104 109 114 125 130 135 135 138Oct 109 103 116 119Nov 123 134 119 120Dec 137 130 134 138Jan 115 130 135 135Feb 120 140 135 138
Prospects Q4 2010 Q1 2010 Q2 2011Plan 9,150 11,829 12,800Oct 11,000Nov 11,500 11,700Dec 12,929 11,829Jan 12,000Feb 11,100 12,800
Plan Forecast Actual
Wins Oct Nov Dec Jan Feb Mar Apr MayTotal 41 37 77 24 50 59 51 62
Gaps vs. ModelJan: Marketing +1; Sales -2; Referral -9Feb: Marketing -5; Sales -7; Referral +2
1/1: Modified Lead definition to include all SDR activity
© 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
Key Lessons for Big Wins
Maximize profit potential in the strategic and tactical planning stage
Discover not just what works, but what works better
Make marketing more measurable to make it more profitable
Use ROI insights to improve effectiveness and not as a pass/fail assessment
Leverage ROI to communicate strategies, success, and gaps and to create actionable dialogue with peers and executives
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Question and Answer
Jim [email protected]@JimLenskold
Additional Insights at www.lenskold.com
Jon [email protected]@jonmiller2
Marketing Forecasting Whitepaperhttp://bit.ly/marketing-forecasting
Thank You!
Page 29© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Challenge: Today’s Investments Have an Uncertain Payoff At An Uncertain Time
Operational systems are not optimized for analytics and allow the data to change over time
Page 30© 2011 Marketo, Inc. Marketo Proprietary and Confidential
Program Effectiveness Forecasting
y = 50.749x-0.571
R² = 0.4301
0
10
20
30
40
50
60
70
3 13 23 33 43 53 63 73
Conversion Model