Without accurate marketing campaign data, any marketing department will find it hard to justify its existence. Higher management needs to know resources employed are delivering the required return.
How can marketing prove their positive impact on the business and ROI? Measuring activity is easy. It is possible to measure clicks, opens, shares, impressions and a host of other signals but how do they relate to outcomes higher management can understand?
The corporate environment is competitive and everyone is keen to claim success and disassociate themselves from failure. In the mass of touchpoints that ultimately lead to a sale, marketing needs to find a way to prove its contribution.
In an old (but still gold) post Annuitas state ‘The rest of the organization tracks and marches to the beat of the revenue drum’. Marketing must follow suit.
Measuring Marketing Contribution
For most businesses, the desired outcome is a sale but in B2B markets many customer touchpoints are required to generate that sale.
Sales cannot operate in a vacuum and support from various business departments (technical, production, quality, management and marketing) will be required in any sales process. Marketing will have inputs at various points but many are soft and can be dismissed as irrelvant by those who may wish to do so.
Proving Marketings Worth – A Process
The problem is how to decide what to measure, how to measure it and how to provide clarity out of the mass of data collected. In our experience the best measurement processes follow a pattern
- Set required outcomes
- Decide what marketing tools will be used
- Define measurement tools and frequency of measurement
- Measure adapt and improve based on accurate data
Set Marketing Outcomes
It is important to not get caught up in simply reporting data, it is outcomes that matter. An outcome must be something tangible and understood (by all) as a benefit to the organisation.
As an example organic website traffic has increased by 23% this quarter is not an outcome, the number of leads generated by organic traffic has increased by 14% is. Or is it? What is a lead? Has it been agreed?
The best approach is to use a range of marketing tools working together to deliver the required result. The actual mix developed will generally be specific to each business and its market.
The tools must deliver data that support outcomes. Ultimately marketing responsibility is understanding the customer and their needs. The latest and greatest toolset and the data it provides is only part of the mix.
Marketing Campaign Performance
Although many B2B Marketing commentators suggest inbound marketing campaigns generate the best return on investment elements of outbound marketing remain effective. The problem is (telemarketing aside) it is difficult to measure the lead generation effectiveness of most outbound techniques.
In contrast, the effectiveness of most online marketing techniques can be measured in great detail. The challenge is not how to record online marketing data, it is more how to form conclusions based on the mass of data available.
Marketing activity compared directly to sales is the ideal measure but as the sale always lags the activity (often by many months) in B2B markets it can be difficult. Many touchpoints lead to a sale.
Sales leads are one possible outcome to measure but what constitutes a lead must be quantified. Lead measurement can leave the marketing department open to attack by those who may be looking for somewhere to hide. It is too easy for others to claim the leads are of poor quality, or for the wrong products or from the wrong customers.
When relating marketing activity to results, and specifically to sales there is no perfect answer. One, relatively simplistic, but useful technique is to set a baseline based on past activity. How many leads are generated at present per month and what is the average conversion (leads to sales).
A variance factor may be added to this number (perhaps +5%) then it is relatively safe to assume that if leads increase beyond this level it must be due to marketing activity.
Leads can then be converted to a rough sales number and compared directly with the marketing costs of generating that sales number to give an ROI. The measure is not perfect as sales numbers can be impacted by a wide range of factors beyond marketing control but it does give an indication that higher management and financial people understand.
Sales may wish to claim that the increase in sales numbers is due primarily to their activity and increased conversions. However, marketing may argue (with some justification) that a major part of that success is due to increased lead quality.
Adapt And Improve
It is only possible to make decisions on how to improve based on accurate data. Without it, there is a major risk of wasting time and effort on unproductive activities based on either on the principle of they seemed to work in the past or pure guesswork.
With a baseline established it is possible to drop poor performing activities and continue to fine tune and improve those that are delivering results. A limited number of new marketing activities may be added to replace those dropped on a trial basis to be continued only if analysis shows they deliver results.
In the past there was often a clear division between sales and marketing. Marketing generated the lead (at which point their involvement ended). Sales took that lead forward to the point of sale
With the rise of inbound marketing the sales and marketing relationship is more complex. A well organised sales and marketing department will have sales spearheading the customer relationships with marketing in close support delivering information (content) to help calm nerves, grease the wheels, overcome objections and help take the process forward.
Given their supporting role analysing activity and proving the ROI of a marketing campaign can be difficult. A clearly defined process is required that concentrates on outcomes clearly understood by higher management.