Marketing Automation and Lead Management Blog

Untangling B2B Marketing Campaigns ROI

I’ve been preparing content for a webinar next week with NetProspex – 4 steps to measure marketing success and “ROI”. The topic is on how to measure the marketing influence on the Sales Funnel.  Because of the difficulties inherent in measuring B2B marketing campaign ROI I recommend that people focus on measuring influence instead. Here is the issue with Campaign ROI in a nutshell.

Let’s start with a definition, and examine the challenges involved in measuring it. ROI for a single marketing campaign can be computed as:

Total share of all opportunity dollars that can be attributed to a campaign in a finite period

-----------------------------------------------------------------------------------------------------------------

Total costs of the marketing campaign within the same period

The first challenge is the definition of a finite time period.

When to measure the ROI of a Marketing Campaign
So the campaign has been running a month, you sum up all the costs, add up your share of all the closed deals, and find that you have a negative ROI (at t=1 above). No surprise there, your sales cycle is 6 months or more! So you wait a year, do the same calculation at t=2, and the ROI is 10x. High fives all around. And you wait another year, and now the ROI is 25x. Pop the champagne. How do you ever decide what the real number is?  You can decide when the campaign ends, but its influence could extend out a year or two thereafter, depending on some deals in the sales pipeline. The best approach is to establish a rule for your firm and follow it for all campaigns. Something along the lines of: the final Campaign ROI will be established at 2x the average sales cycle duration after a campaign has ended. After that, no share of the opportunity dollars are attributed back to that campaign. This brings us to the second challenge - share of opportunity dollars.

Share of opportunity dollars

So if a closed won $100K opportunity can be shown to link back to 100 marketing campaigns, trade shows, white paper downloads, and website visits, do they all get an equal share of the opportunity value? Each gets $1000 credit in this case. Or are some campaigns considered more important than others (unequal weighting)? Perhaps tradeshows are worth 10x more than website visits but only 2x the value of a webinar attendance. And are webinar registrations worth less if the contact failed to attend?  This could get messy very quickly. My advice, start simple, give all incoming responses an equal share. Out-going touches (such as sent an email) get nothing. Some CRMs assign 100% of the opportunity to each campaign in their campaign influence reports – how messy is that?

Attributing opportunity dollars to Marketing Campaigns

How do you attribute opportunity dollars back to a marketing campaign? Perhaps you have gone down the path of trying to specify a primary campaign source for each new opportunity. You will probably discover, as many have, that this method is fraught with problems and is unreliable.  Most importantly, in the case of ROI, it vastly under represents all of the marketing campaigns involved in any one opportunity. So let’s start at the other end: link all campaigns to contacts and then link the contacts back to opportunities. Your marketing automation system links contacts to campaigns. Linking the contacts to the opportunities is not as straight forward. You want to be able to link all the relevant contacts on an account back to opportunities.  Some folks may choose to only link back contacts associated with the opportunity, whereas others, recognizing that Sales folks often do not associate any contacts with an opportunity, may grab at all the contacts on an account. To pull this off accurately, you will need a marketing BI engine, because for every opportunity you have to be able to connect back to every relevant contact, and attribute a share of the opportunity dollars to every campaign they responded to. The BI engine relieves you from depending on good Sales behavior for connecting marketing campaigns with opportunities.

So the top line of the ROI equation has its challenges, and we haven’t even started the conversation about cost allocation to marketing campaigns. Let’s save that for a future conversation.  In the webinar next week, I will discuss a better, more expedient method of measuring marketing influence on the Sales funnel.  Chances are good this webinar will be available as a webcast in our resource center shortly thereafter!

-Kevin

Economic Downturn - A chance to leapfrog your competition

It is interesting to listen to the economic pundits talk about whether we are already in a recession or whether we are heading towards one. While the popular definition is 2 continuous quarters of negative economic growth there are other interesting views about this definition. Here is an interesting blog post by two economic professors at UC San Diego and University of Wisconsin, Madison where the authors espouse that "recessions represent distinct and objectively identifiable episodes in which the usual dynamic factors that drive economic growth-- technological progress, population growth, and capital accumulation-- are replaced by a distinctly different dynamic in which lost income in some sectors feeds back into declines in output for others".

While economists fight out the technicalities of a recession what are B2B Marketers doing to brace for a period of sluggish growth (at best)? Here are a few areas that we at Market2Lead think Marketers should focus on in the near future so that they can emerge more effective and efficient when the economy turns around.

1. Consolidation & Automation - Eliminate rote work: Most businesses are extremely sensitive to cash investments vis-a-vis resource investments. Many potential clients that we talk to have a hodge-podge of systems/resources to manage their Marketing efforts. A typical mix includes email tools, data scrubbing tools, landing page tools or web masters, webinar registration tools among others. Some of these tools tie into the client's CRM system while others don't. A significant amount of operations resource time is spent in moving data between the tools, scrubbing data files and manually building reports by collating data from these tools. During recessionary times companies are forced to not just cut back budgets but are also forced to either cut back or extract more efficiencies from existing
resources. At the same time, work load typically goes up. The best way to work within these constraints and still maintain throughput is to consolidate systems. Now is the time to invest in a comprehensive Marketing Automation solution that will help automate/eliminate manual tasks. Another big benefit is Marketing departments will be able to spend time on strategic initiatives that can have a direct impact on top line revenue.

2. Lead Nurturing - Extract more from past investments: Sirius Decisions published a study that mentions 80% of Leads generated by B2B marketing are not followed up by sales. Also in times of slow economy growth most companies either delay buying decisions or are extremely picky in their buying decisions. This basically means that a slowdown in sales cycle time. The smart thing to do at this time is to shift focus from campaigns that drive new demand to campaigns that can nurture existing Leads. With cost effective tactics like emails, webinars, online syndication etc. lead nurturing campaigns are a lot more cost effective than demand generation campaigns. Marketing Automation solutions can help Marketers design and automate nurture campaigns that can extract more revenue from Leads that did not convert. A study published in Marketing Management V3 #2 suggests that 45% of Marketing Respondents buy in 12 months, not necessarily from companies that initially marketed to them. This is popularly called the "Marketing rule of 45" and has held the test of time for 3 decades. In this day and age, with a plethora of cost effective technologies and related processes, most companies barely manage to get a 5% yield from their campaigns. Now is the time to shift focus from Demand Generation to Lead Nurturing and extract more value from existing spend.

3. Funnel Optimization - Plug leaks: Marketing organizations need to scrutinize every stage of the integrated marketing and sales funnel and look for opportunities to increase throughput. Now is the time to look at conversion rates, qualification rates, sales follow-up rates and win/loss rates. Look at campaigns that demonstrate "Spray and Pray" symptoms. Figure out ways to optimize existing segmentation strategies and move towards an "Aim and Shoot" stage. In my observation, most organizations still lock and load a significant portion of their databases hoping for larger conversion numbers. Instead, focus on conversion ratios. You might get the same numbers by targeting a smaller audience segment. Next, talk to your sales organization and find out if there is a change in their capacity to handle Leads. Sales might be happier with fewer Leads if they are better qualified. You can positively impact sales morale and productivity. Recessions impact some industries more than the other. For example, in the current economic climate, it's a bad idea to go after the financial services market to meet revenue goals for the immediate future. Align your demand generation campaigns with industries that are relatively healthy when compared with the others. To facilitate this level of analysis your Marketing Automation system should give you visibility into the extended funnel and sales stages like lead promotion, opportunity management and forecasting.

4. Increase throughput - Implement best practices: This is a fantastic opportunity to take action on those creative ideas you had in mind to improve throughput from your campaigns. When the economy is roaring companies lay more emphasis on velocity to grow revenue aggressively. Inefficiencies are hidden or ignored when companies are in "order taking mode". When the economy slows down companies are forced to change behavior and become smarter. Budgets accommodate fewer campaigns and expect better results. Now is the time to wipe the dust off the best practice guides that you really wanted to implement but never got the time to. Try and micro-segment your campaigns and try different variations for emails, landing pages, microsites among others. MarketingSherpa is a great resource for case studies and best practices. Look for technologies that support A/B testing for emails, multi-variate testing for Landing pages, recommendation techniques for offers on microsites, progressive profiling techniques to improve form completion rates.

5. Measure, measure, measure - justify your spend: Marketer's are always under pressure to demonstrate return on their investments. The scrutiny is all the more pronounced during tough times. Every penny has to be justified and every campaign has to be measured. This job is relatively easy for demand generation campaigns since these campaigns are optimized for generating Leads. But demand generation campaigns always need support from awareness campaigns to build brand equity and buy mind share. As a Marketer, you know that you need to invest in PR and SEO to drive traffic to the website. How do you quantify the value from such investments to a CFO or a CEO who is trying to connect the dots between spend and revenue. The only way you can accomplish this is to be able to correlate data and trends from different initiatives and draw trends that can be quantified. This requires a robust Business Intelligence solution that will give you the flexibility to slice and dice data in different ways and look for interesting trends and patterns that can be used to justify spend. Imagine if you can view web traffic trends and marketing funnel trends side by side on the same dashboard and have the capability to analyze the impact of one on the other. It's a much easier argument to show your boss that by keeping the constraints constant on the demand generation side the quantifiable impact a dip in PR and SEO effort has on the funnel.

Recessions can be looked at with caution and skepticism or can be looked at as an opportunity to get lean, smart and more efficient. History tells us that smart companies emerge from down cycles much stronger and fitter and the weaker companies lose out.

Are we including the right Campaigns for ROI measurement?

To continue with the theme of the previous post, here is another problem that I frequently see with Opportunity management in Marketing systems. The high level business requirement that we hear is, "We need to track opportunities created in SFA systems and tie them back to Marketing campaigns". If you use a Marketing solution that integrates with the Sales system for ROI measurement, here are a few thing you might want to consider:

1. Is there an option for selecting the appropriate "Campaign Types" for Opportunity tracking. For example, a "thank you email" that gets sent out after a webinar might also be treated as a Campaign in the Marketing system. Obviously, such follow up campaigns are not candidates for Opportunity tracking. You should be able to include/exclude "Campaign Categories/Types" for Opportunity tracking.

2. Is there an option for selecting from a list "Campaign Activities" for tracking ROI?  For example, you "Sent" a  Prospect an email that  he did not "Respond" to. If at a later point an opportunity was generated from this Prospect, do you credit this Campaign or not? Another example is, A Prospect "Registered" for a Webinar but did not "Attend" the webinar. Do you credit the webinar Campaign with any future opportunity generated from this Prospect?

I am sure we all must have been in a situation where we pull a Report and go "Why are Opportunities A,B and C tied to this follow up Campaign that we sent out?". This results in last minute run around and manual fixing before the Report makes its way to a Sales and Marketing executive review meeting.