Ways to Measure Marketing Performance
Measuring marketing ROI is hard. We know it takes multiple touches to convert a lead into a sale. Sometimes the money you invest today in a marketing program will not pay off until next month or even two years. Who is to say factors outside your marketing strategies like an upturn in the economy impact the return on investment (ROI) of a particular marketing campaign?
Here are four simple methods using marketing analytics to measure marketing ROI.
- Single attribution like first or last touch
Single attribution is the easiest, least complex method of determining marketing ROI. For example, if your company sponsored a trade show and generated a lead that closed 18 months later, the trade show, that is the first touch, gets revenue credit. If your sales team nurtures a lead that converts after seeing a demonstration, the last touch, the demo gets credit.
Single attribution is a relatively easy and cost-effective way to measure marketing ROI and offers great insight into the early stages of your revenue cycle and your investment per lead metrics. However, single attribution does not account for the impact of later or earlier touches. Also, a long sales cycle or a large deal could skew the metrics.
- Single attribution with revenue cycle projections
Using the trade show example from above, you could use the single attribution of first touch (the trade show) and project the long-term impact of potential revenue based on historical conversion metrics. Your understanding of how similar trade shows converted over time allows you to estimate future revenue. You could determine, “we saw around 500 people at our booth at the trade show and expect to add $450,000 in revenue over the next X months.”
Single attribution with projections helps you estimate the future value of your investment today and focuses attention on the revenue impact of your marketing programs rather than at the top of the funnel. Again, this method does not account for the influence of other touches, and it requires you back up your estimate with actual results.
- Multi-touch attribution
Multi-touch attribution is more complex but gives a better picture of how touches influence a conversion. To carry out multi-touch attribution, start with the ending result you’re analyzing such as a closed deal and work backward, identifying each significant touch for all contacts associated with the deal. Only account for touches that preceded the result.
Once you have a list of touches, you can allocate revenue, pipeline, etc. to each touch. The simplest way is an even distribution. For example, if you counted seven touches, each touch gets 1/7 of the result. You can also weight each touch by time (e.g., trade shows have longer cycles than other touches) or by program type (e.g., attending a seminar carries more weight than visiting the website would). Consider that adding weights adds a subjective element to your attribution.
- Testing with control groups
Test the effectiveness of a marketing initiative against a well-formed control group by comparing the two groups’ results. Comparing the results is an effective way to measure the impact of your marketing campaign, but it can be cost-prohibitive to test everything this way.
Testing is a more sophisticated way of analytically measuring the impact of your marketing programs, but it cannot report on all programs’ effectiveness. Only when there is a variance in buyer behavior can you attribute it to the particular program.
Whatever method(s) you choose to measure your marketing ROI, strategically invest your time and financial resources in developing the measurement model that works best for your programs and your business. You can optimize your programs and tweak top-performing marketing campaigns to increase sales, profits, and market share. Those are the results that show the marketing performance ROI you want.
Not sure how to go about setting up an attribution or some other measurement model? No problem. KEO Marketing specializes in lead attribution and can help design a model that works for you. Contact us today to schedule a free consultation.