Most CMOs believe ROI should be the primary measurement of marketing effectiveness.
This isn’t me saying that. That’s according to an IBM survey revealing 63% of CMOs surveyed think ROI will be the main measurement by 2015 and that 56% feel ill prepared to manage ROI. Other surveys have found the same thing.
Thanks to advancements in analytics and marketing automation have put measuring marketing ROI possible. The problem is one of definition and communication. What exactly constitutes a good ROI result? The jury’s still out. And until they come back with a verdict, ROI is too broad.
But it doesn’t have to be that way. Let’s take a look at some ways to measure marketing ROI.
1. Against the Industry Benchmark
This is an easy enough measurement to make. But does it really say everything 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 where your organization stands, but it’s not what ROI is about.
2. Against What You Spent
You definitely need to know if your campaigns aren’t generating enough revenue to justify the 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? If you’re being judged on overall revenue generated, maybe not. 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-over-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 enough 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.
Of course, these are just a few thoughts to get you started. There’s plenty more resources on marketing ROI in our marketing cosmos. Come on by and go for a ride.