I’m a bit of a wanna-be surfer. I love getting out in the water and catching a few waves. There’s an amazing website called MagicSeaweed that very accurately predicts the size and frequency of waves of surf spots worldwide. It is amazingly accurate for all the surf spots near us in Bournemouth. In this day and age where the size and frequency of waves can be accurately predicted seven days in advance, I’m amazed that there are still so many businesses that aren’t aware of how they can accurately measure their marketing return-on-investment – (marketing ROI).
I’m immersed in marketing ROI, day in and day out, and forget that for most businesses it’s an elusive number. I was reminded of this a few weeks ago when I attended a couple of events. I spoke to a number of business MDs and marketing directors and most expressed the challenge of accurately measuring their marketing ROI.
At LexisClick we have invested significant time and money in developing and purchasing systems that help us measure and prove results and marketing ROI to our clients. I'm speaking with our team, clients and potential clients about it daily as well as reading countless posts and books on the subject.
So when I speak with MDs and marketing directors of significant businesses who aren't even aware that they can accurately measure their marketing ROI, it amazes me that they don’t know of the solutions that are open to them.
Admittedly it can be a complex journey to accurate measurement - especially in the B2B environment where large and complex sales are the norm. Nonetheless, with the vast sums invested in winning new customers, it is essential that measuring marketing results is a key element of the marketing mix.
What should you be measuring?
The basics that senior decision makers need to understand will typically include:
- Total marketing investment
- Total leads generated
- Total sales generated
- Cost per customer acquisition
- Cost per customer acquisition by channel
- Lifetime customer value
- Customers per channel and campaign
- Revenue per channel and campaign
- Percent marketing spend per customer and revenue generated
Many will go a lot more granular than this. We typically have detailed metrics for each of the marketing channels that we are managing. However, most of the detail is left to the person responsible for managing the channel. Senior decision makers will only get involved in the detail when they need to understand high or low performance so that success can be replicated or issues fixed.
We also look at a number of surface metrics on a daily and weekly basis. These will usually also be included in executive reports, typically:
- Website visits
- Visits by channel
- Campaign performance
A large part of our work is also developing lead nurturing programmes to move leads through the marketing funnel until they become sales-ready and need to be called by the sales team. This is important as it saves sales people time and frustration by allowing them to focus their energies on sales-ready leads.
Understanding the effectiveness and ROI on typically intangible marketing activities such as PR and social media marketing is also feasible using the right techniques.
How to measure your marketing ROI
Firstly you need to have the right analytics systems in place. Most businesses these days will use Google Analytics reporting and Google Adwords reporting. Getting this set up correctly is essential.
You need to make sure that the data is being captured accurately. Use filters to exclude internal and irrelevant traffic, for example from territories that you do not operate in. Also make sure that your conversion tracking is set up correctly, so that you can measure online enquiries, emails and inbound phone calls.
When capturing leads, you need to make sure that their originating source is captured. Google Analytics does not allow tracking down to an individual level, this is where more detailed marketing analytics systems come in to support with more granular reporting. In its most basic form you can use a drop down selection on enquiry forms and in your CRM system, but we have found that the person filling in the form usually makes the easy selection, rather than the actual selection. Investing in an automated solution is more reliable and means potential customers have one less thing to think about when enquiring.
We have developed our own bespoke solutions and also use specialist services and marketing systems to accurately measure marketing sources.
Capturing costs
For many businesses, capturing digital marketing costs consists of capturing the costs of PPC and Google Adwords and perhaps agency costs such as SEO. However, to get an accurate picture of your marketing ROI, you really need to capture all of your marketing costs.
Remember all your channels including PR, referral site advertising, offline advertising and events.
Ideally you’ll break these down by channel, so that you can assess the cost and returns for each of your marketing channels.
Remember to include management costs as well as the direct costs of advertising. If you are running an in-house team it is best to calculate an hourly cost per hour worked, this should include a share of overheads and other costs like training etc, to really get an accurate figure. If you are using an agency they should be able to supply you with the management costs per channel.
This might sound a bit daunting, but it needn't be.
To accurately measure revenue generated and marketing campaign effectiveness, it is essential that you invest in both marketing and sales alignment, and in closed-loop reporting.
Marketing and sales alignment
This is really about correct communication between the two teams. Traditionally feedback on the quality of leads and sales success is poor from sales to marketing. Agreeing lead scoring metrics, feedback meetings and mechanisms will all help with this.
It is also really helpful to provide marketing information to the sales team on leads. If they can see the resources leads have downloaded and important pages viewed on the website, these will all help with their discussions with the potential customer.
Closed-loop reporting
This means getting marketing information such as marketing source and marketing interaction into your CRM system and then assigning revenue generated back to these sources and interactions.
Getting visibility of revenue generated by source is essential to understanding ROI and being able to use it to make more intelligent marketing decisions in the future.
We've all heard the saying: “I know 50 percent of my marketing works - I just wish I knew which 50 percent.”
There are plenty of systems and tools are available to give you this information, so if you don't know which 50 percent of your marketing is working - it’s time to make sure you do.
