In today's competitive marketplace, data that underscores marketing's contribution to the bottom line is not only necessary for increased funding, it has become a key element to job security for the CMO and others within the marketing department. The conundrum is that even when sales results go through the roof and the company is breaking budget expectations left and right, marketers still aren't sure about the true role their programs may have actually played in the company's success. More importantly, neither are their bosses or the CFOs divvying up the budget.
Study after study has pointed out the difficulty marketers have in measuring the ultimate impact of their programs on sales results. Yet the ability to accurately assess marketing's return-on-investment is increasingly critical to corporate success and to ensuring growth in the marketing budget. And being able to identify marketing campaigns that truly drive revenue inevitably provides the visibility that allows marketers to build on success.
The first step in gaining insight into the impact of your marketing campaigns requires a very low-tech approach. It starts with gaining agreement regarding how your company specifically measures ROI.
Don't assume you know the answer. The term represents different things to different people and is bandied about by many without solid agreement regarding its true meaning as defined inside the company.
In order to accurately evaluate the impact marketing activities have on sales results, marketing and sales departments must be aligned regarding goals and outcomes and how they are measured. Simply measuring the number of leads generated by a marketing campaign doesn't provide enough insight to determine the ultimate effectiveness of the marketing program. Leads must be qualified in some manner consistent with the business goals of the company. Obtaining both sales and marketing agreement about what a qualified lead looks like can be a tricky and sometimes even contentious process. But it must be done.
Once agreement has been reached about what success looks like and how it will be measured, you can begin building performance metrics into the marketing plan. Just as the sales team is tasked with reaching certain revenue benchmarks, every marketing project or spend should have clear financial performance criteria delineated at the outset as well. Measuring results against these projected outcomes provides unbiased feedback to executives on the performance of marketing campaigns, as well as helping to build confidence in marketing's ability to objectively allocate dollars to high value and successful activities.
No matter what measurement criteria you choose to start with in establishing the value marketing brings to the organization, it must hold up under scrutiny from a financial perspective in order to gain and maintain credibility among C-level executives and to justify increased expenditures on the marketing program.
Unfortunately, establishing a solid plan for ROI marketing can be difficult. Even when a company has good data for analysis, it's all too often siloed away in various departments. Integrating data from across an enterprise can be hard work.
If you feel there are organizational barriers that hinder your ability to gather meaningful data, start by simply bringing some basic financial intelligence into the decision process. Conduct basic ROI projections using information readily available. Monitoring marketing ROI can begin simply by identifying the cost of each marketing activity and tracking the leads each brings into the sales pipeline. Add a lead-scoring process to the program and you have enriched the ability to identify the most effective marketing tactics -- those that bring in the most sales-ready prospects.
In order to gather truly actionable data, you have to implement new technologies that provide visibility into sales and marketing efforts and results. Establishing a closed-loop program between marketing and sales can provide real insights into how various marketing activities are driving revenue. This is a critical step in the process of showing how marketing makes money for the organization.
A key enabler for success is a strong marketing automation platform utilizing a single relational database to collect, segment, execute, automate and integrate all marketing campaigns. Marketing automation platforms enable companies to manage lead generation, lead nurture and relationship marketing programs that deliver complete, accurate, timely and unbiased ROI reporting. In addition to traditional marketing metrics like number of leads generated from a specific campaign, closed-loop solutions show marketers how much revenue is created from a specific campaign, offer or lead source. Marketers can also measure the average number of touchpoints from marketing or sales necessary to close a lead, or which marketing offer produces the most or best leads.
The bottom line is that measuring marketing ROI is about more than simply justifying budgets. It is the means by which companies can move forward, gaining more market share and delivering more revenue with greater efficiency. Keep in mind that proving marketing ROI isn't just data on a spreadsheet. It's at the very core of good marketing.