Calculating return on marketing investment has been a growing battle cry at companies of all sizes. There is increasing agreement that measuring ROMI is an important and valuable task. Otherwise marketers and companies may be blindly throwing dollars at marketing programs that are not delivering sufficient bottom line value.
But there’s more a battle than a battle cry. As more senior marketers enter the age of marketing metrics and quantifying the value of marketing to the bottom line, many are finding it to be an uphill battle.
It’s easy to ask the question, “What kind of financial results do my programs deliver?” However, determining the answers can be challenging.
Measuring the ROMI contributions of individual tactics of a multi-tactic campaign can be another challenge.
I like to compare a multi-tactic marketing campaign to football. There are a lot plays that go into reaching the end zone. From a measurement standpoint, you have tactical teamwork – passes, runs, blocking – all working towards the goal of a touchdown. Even though one player ultimately scores, it’s hard to assign credit for the touchdown to one player – it’s a team effort.
So is an integrated marketing campaign. You’re running trade ads focusing on customer service innovation. The ads’ call to action includes requesting a customer service white paper. There’s ongoing trade PR. There’s a promotion – say, discounts for multiple shipments, which is supported by direct mail, your e-newsletter and Facebook. From a marketing ROI standpoint, as you successfully get leads and conversions, how do you measure the impact of the individual tactics on sales?
It typically takes multiple touches to convert a cold lead into a sale which can take place over months, even years. These cumulative touches can range from face-to-face sales calls and exposure to marketing communications to digital interactions. This fact can make it difficult to link an ultimate sale to any specific touch.
Solution: However, you are still left with assigning credit. If you are going to assign credit to individuals and not the whole, be consistent. Attribute all the ROI value to the tactic that originally brought the prospect to you – maybe it was a webinar. Or, assign all the ROI value to the last touch as the final marketing activity – perhaps it was a direct mail piece, that converted a prospect into a customer. The trick is, be consistent.
Knowing when to measure
The money you invest today will have an uncertain impact at an uncertain point in the future. Last month’s trade show may deliver results next month or perhaps not until next year, but marketers need to decide where to invest their budget today.
Solution: Start measurement at the beginning of a marketing tactic’s sales cycle and continue for at least a year. Don’t quit too soon. A common mistake is giving up on tactics before they are done bearing fruit. Sometimes, prospects don’t act on something for months.
In many cases, factors outside marketing’s control can significantly impact program results – from macro-economic trends to the weather. If revenues increased because the economy improved, can marketers claim their programs delivered better ROI?
Solution: This is a challenging one, but you can conduct an environmental scan to identify and evaluate marketplace forces beyond your control that may influence the customer and may impact your marketing campaign: these could be socio-economic, political, regulatory, competitive and other marketplace factors – all of which may impact your organization’s sales.
Data silos / Organizational structure
Customer purchasing and prospect interaction data is unavailable or spread across the organization in many different data silos. Or, the company’s organizational structure undermines coordination and collaboration required for effective measurement of ROMI.
Solution: Marketers need to collaborate with Finance to agree upon a framework that provides the financial insights of your marketing efforts and enlists the support of other departments, such as IT and Sales. But, in a way that ensures you and your team are not so consumed with reporting results that your ability to create results suffers.
Even given these challenges, the fact remains that measuring your marketing ROI is critical and, with some thought, company buy-in and teamwork, the obstacles are not insurmountable.
Next blog… I’ll cover developing metrics and provide examples of how to measure.
Rick Verbanas has brought his passion for marketing to Fortune 500 companies, small businesses and not-for-profits. He strives to stay current in the latest marketing best practices, and provides a weekly roundup for your news and enjoyment. To subscribe to future blogs, please enter your email address on the left hand side of the page.