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315 East Eisenhower Pkwy. | Ann Arbor, MI 48108 | 800-722-2264 | www.spryideas.com

ROI—TAKING

OF YOUR MARKETING MEASUREEFFORTS

It’s the question that strikes fear into the heart of the most seasoned marketing manager: “What was the return on investment (ROI) for this program (e.g., email blast, trade show, social media campaign, etc.)? It’s a legitimate question because company executives and the people to whom they answer are natu- rally concerned with the “bottom line” and want to make sure that marketing expenditures are netting results. However, it can also be a challenging and complicated query. Determining the exact contribu-tion any given marketing program has on revenue growth or profits is akin to defining happiness—it depends on to whom you are talking and what their priorities are!

Yet, difficult or not, measuring your marketing efforts is necessary and, thankfully, not impossible.

Feeling overwhelmed by the task of measuring the ROI of your marketing efforts? You’re not alone! Research by eMarketer indicates that 33% of B2B marketers don’t measure marketing ROI—at all. And, only 1 in 3 B2B marketers worldwide report financial- contribution metrics to senior management. No wonder marketing budgets are so tight!1

ROI—MEASURE MARKETING EFFORTS 315 East Eisenhower Pkwy. | Ann Arbor, MI 48108 | 800-722-2264 | www.spryideas.com

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Understanding the ChallengesBefore we delve into how to measure the effectiveness of marketing programs, let’s take a look at some of the challenges marketers face.2

Timing Issues—When you launch a program, the money you spend today typically does not have an impact until some undetermined point in the future. It can be tricky to pinpoint when to measure results. For instance, a webinar may attract prospects who convert into customers right away, a month from now, or even a year later.

Determining the Magic Touch—Custom-ers rarely buy after seeing one ad, reading a single tweet, or even attending one trade show. Particularly in B2B marketing, the path to purchase is often complex and involves multiple touches over time. So, which one is the “magic” touch? It’s almost impossible to allocate revenue to one specific marketing effort.

Decisions by Committee—The average buying decision at a mid-sized company involves six people. When you look at larger companies making more complex purchases, that number can reach 20 or more. Obviously, each marketing pro-gram affects each influencer differently, making it difficult to determine which program gave you the most bang for your buck.

Due to Outside Factors—There are many variables that can impact a program’s results—from economic trends or the timing of a sales call, to something as un-predictable as the weather. Therefore, it can be tough to attribute ups and downs solely on a particular marketing program.

Is ROI the Right Measurement?Determining ROI is all the rage these days. By definition, ROI is the financial metric for evaluating the financial conse-quences of individual investments and/or actions and is usually expressed as a percentage. It would be nice if the results of marketing efforts could be expressed by a simple percentage, but that’s rarely possible. In fact, some experts have cau-tioned executives not to use ROI to gauge the value of marketing efforts. Case in point, Dominique Hanssens, professor of marketing at UCLA Anderson School of Management and cofounder of Market-Share says, “Linking marketing to financial performance is absolutely critical. It’s just that most people who use ROI in a mar-keting context probably aren’t applying it correctly or really mean something else. ROI’s roots are in evaluating one-time capital projects, which marketing clearly is not.” As she explains, marketing expenditures are technically an expense, as opposed to an investment. “ROI is too limited and falls short of helping us understand marketing’s contribution to business goals, or how those goals can be improved.”

Furthermore, focusing solely on revenue generated compared to dollars spent does not take into account “a complex web of interactions that happen in between,” cautions Daniel Kehrer, VP Marketing, MarketShare, and financial journalist. “If you settle for a seductively simple measure such as ROI, you may se-verely distort the true value that market-ing is delivering to your organization.”

Adam Kleinberg, CEO of Traction, agrees: “Marketers should define thoughtful metrics and measure the work they do in social media (and other areas), but not necessarily in terms of ROI.” So, what are those thoughtful metrics, you ask?

Measuring SticksWhile today’s high-tech data-gathering and analyzing tools are helping marketers measure their efforts more effectively, there is still no “one size fits all” measuring stick. In general, there are several com-mon methodologies that can be used to determine the ROI of marketing pro-grams, including:2

Single Attribution (First Touch/Last Touch)—With first- or last-touch at-tribution, all the value is allocated to the first or last program that “touched” the deal. Single attribution is relatively straightforward and easy to implement, but it doesn’t account for all of the other programs or lead nurturing that may have influenced the buyer along the way, especially in a long sales cycle.

Single Attribution with Revenue Cycle Projections—Typically there is a time gap between marketing expenditures and their impact. To account for this gap, you can add revenue cycle projections to first-touch single attribution, which shows results for a particular event both immediately and estimated over the entire revenue cycle. (Estimates are based on how similar events have performed.)


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Multi-Touch Attribution—Recognizing that it often takes multiple touches to convert a customer, this approach divides the credit among various programs. So, for example, if you are measuring sales in-creases during a certain time period, you begin with total sales and work backward, creating a list of all events/programs/sales calls that contributed to a particular deal. If there were six touches, then each touch receives credit for one-sixth of the revenue generated. Some companies use a more sophisticated version of this methodology by weighting different strategies.

Goals Possible Metrics

Brand awareness Website traffic, page views, video views, downloads, social chatter, links

Engagement Blog comments, likes, shares, tweets, pins, forwards, inbound links

Lead generation Form completions and downloads, email subscriptions, conversion rates

Sales Online sales, offline sales, manual reporting, and anecdotes

Customer retention Percentage of content consumed by existing customers, renewal rates

Upsell/cross-sell Sales for new products/services

Source: Content Marketing Institute’s The Complete Guide to Influence Marketing Strategies, Templates & Tools

Market Mix Modeling—This method combines marketing programs with other variables (i.e., pricing, product, place-ment, competition, economic trends, etc.) using complex statistical analysis, such as regression, to determine how each of these variables impacts the bottom line. As you might expect, this type of mea-surement requires tons of data and some sophisticated analytical programs, but it also tends to be quite accurate.

Test and Control Groups—When it comes to evaluating the effectiveness of a specific marketing program, using test and control groups can provide very ac-curate results. You can also test very spe-cific tactics, such as different messages, communication vehicles and frequency, or spending levels. However, it can be-come very expensive to test everything, so using this method strategically is key.

Getting StartedWhether you are already using one of these methodologies or are struggling to find a technique that works (and dreading the pros-pect), we have a few suggestions to put you on the right track.

Set Clear Goals—Determine which key performance indicators (KPIs) are important to track and then set goals for each one. These marketing KPIs will be the basis of your ROI analysis. It all comes down to this: What are you trying to accomplish and how will you prove it worked? This process also involves deciding how frequently you will collect and review data, as well as who is responsible for collecting and reporting data.

Sample—Common Content Marketing Goals and Associated Metrics


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Set Up Tracking Mechanisms—This tends to be easier for digital marketing that can be tied to trackable clicks/opens or land-ing-page visits. For traditional media such as print advertising or radio/television, consider using promo codes and surveys (i.e., how did you hear about us?).

It’s also important to gather data by pro-gram, such as trade shows, website, print advertising, or social media. Depending on the size and scope of your business, you might use more narrow segmenta-tion, tracking individual events/programs. Either way, decide what’s best for you and stick with it.

Create a Method to Calculate Marketing ROI—As we discussed earlier, there are several general methodologies for calculating ROI, but every company will have its own specific way of determining results. For example, a basic model can be built around these questions:

When setting goals, it might be helpful to learn from industry peers. Conduct some research on what others in your industry are doing to ensure that you’re on track. It’s also important to be ready to adapt, as goals and strategies may change over time.

Aligning marketing activities and KPIs with sales goals is paramount. Unless you are helping to generate sales, you are only marketing for marketing’s sake.

2016 Advertising/ Marketing Source

2016 Expense

Leads Generated

Sales Generated

Sales Volume Profit/Loss Cost/Lead Cost/Sale Close %

Web activities

Trade shows

Direct sales

Print promotions

Totals

• What was the overall spending per channel?

• How many leads did we get? (Calculate cost per lead.)

• How many leads turned into sales? (Calculate cost per sale/opportunity.)

• What was the value of those sales? (Calculate overall ROI.)

Creating a spreadsheet like the sample below is a simple, yet effective way to track results.

Sample Spreadsheet

315 East Eisenhower Pkwy. | Ann Arbor, MI 48108 | 800-722-2264 | www.spryideas.comROI—MEASURE MARKETING EFFORTS

ROI—TAKING


Analyze and Improve—This is arguably the most critical part of your activities. After all, the purpose of tracking ROI (besides keeping your executives happy) is to make better decisions going forward.

Set aside time to review data and discuss what’s working and what’s not, and then use this information to formulate next year’s strategy. In a perfect world, sales would play a role in this data review and

strategy formulation, which circles back to aligning marketing goals with sales goals. With sales input, you can deter-mine if you’re tracking the right KPIs and whether marketing efforts are helping to make sales.

What About the Soft Stuff?Some marketing activities are more difficult to quantify than others. General branding or awareness campaigns (often referred to as soft marketing) are good examples. There is no doubt these efforts are valuable, but determining their value can be tricky. Let’s look at web traffic, for instance. When you create content and distribute it to your audience, you hope it will drive traffic back to your web prop-erties. While traffic alone doesn’t pay the bills, measuring an increase in organic traffic from search engines to your website is a good way to determine whether the content you’re creating is resonating with your audience. Non-branded organic traf-fic is an indication that people are using the search engine to find the types of product or services you offer, as opposed to searching for your business by name. This makes traffic a useful KPI, which can help you balance your efforts to optimize search engines (SEO) for long-term results, with shorter-term social media activities.

Speaking of social media, after a decade of use, marketers are still trying to figure out its impact on business! It’s hard to pin down the value of blogs, Facebook posts, and tweets; and honestly, many market-ers have no idea if social media actually results in sales. However, just because you can’t quantify social media doesn’t mean you can afford to ignore it—particularly if your competitors have a strong social media presence. It’s like this: You may not want to attend the boss’s or vendor’s party, but your absence will be noticed!

Of course, there are social media metrics that can help you make better marketing decisions. The number of quality social interactions that each piece of content garners, for example, tells you whether your content is interesting to your audi-ence. By monitoring the gross amount of tweets, retweets, likes, shares, comments, mentions, and more, your business will be able to determine which content was well-received, on what platform, and by which users. That’s good intel. If in doubt, there are professional services that can help you gather and analyze data regard-ing these activities.

315 East Eisenhower Pkwy. | Ann Arbor, MI 48108 | 800-722-2264 | www.spryideas.comROI—MEASURE MARKETING EFFORTS

ROI—TAKING


Sources 1 “33% of B2B Marketers Don’t Measure Marketing ROI (Data), Pamela Vaughan.

2 Adapted from “How to Measure the ROI of Marketing Programs,” Marketo, by Jon Miller, March 14, 2013.

Other Sources“Analyze the ROI of Your Innovation Idea, Step by Step,” published by the Young Entrepreneur Council, 2013.

“Social Media ROI,” K.C. Claveria, Content Strategy, Social Media & Inbound Market-ing Blog, 2015

“Why ROI Is Often Wrong for Measuring Marketing Impact,” by Daniel Kehrer, VP Marketing, MarketShare, as published by Forbes Insights, 2013.

The marketing experts at Spry Ideas.

The Cure for NumerophobiaIf all this discussion of statistical analysis, spreadsheets and metrics is making you squirm, you may suffer from numero-phobia—the fear of numbers. Just like arachnophobia (fear of spiders) and coulrophobia (fear of clowns), numero-phobia is quite common. Heck, many of us have had it since our first grade math class! But you can conquer this fear. If you don’t already have a workable means of tracking results, start small. Having a few accurate means of measurement is better than compiling a large stack of data that no one understands. Plus, you’ll be way ahead of the one-third of B2B marketers who are not measuring any results.

If, on the other hand, you are measuring results, there’s probably room for im-provement. You may want to consider employing the services of an outside agency to create an effective model or hire a staff member who is dedicated to tracking and analyzing data. Just as there are people who think tarantulas make fine pets and clowns are cute, there are those who love working with numbers. These folks are generally found in areas like finance, but who says you can’t add a numbers guru to the marketing team, which also leaves you and your staff more time to be creative geniuses.

One thing is certain: Investing time and money in developing a comprehensive measurement model will provide future dividends. Not only will you feel great presenting your results to the execu-tive group (and dare we hope, ask for a bigger budget), but you’ll also have the means to fine-tune your marketing efforts. And that can only lead to contin-ued success.

” Inspiration is difficult to measure, but the results driven by that inspiration are powerful.”

— Scott Harrison, Founder of charity:water

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