In this chapter of the book, we discuss some of the challenges to attaining useful measures of Marketing ROI (MROI), and introduce some concepts to overcome the traditional challenges to ROI measurement.
To measure ROI, you must have a consistent and realistic measure of return, and the only consistent and real measurements of return are financial targets. Therefore, you must begin by stating your desired financial targets.
You should also be able to state up front what your desired ROI is. Too frequently, marketers carry out activities and then wonder what those activities were worth. This is backwards—marketers should define their target ROI at the outset.
If you know your financial targets and your ROI targets, it is simple to calculate your target marketing budget. Campaigns should then be devised to meet the financial target with the appropriately-sized budget.
This is not the typical approach to calculating Marketing ROI (MROI), to the detriment of the function. Marketers tend to measure what they can rather than what they should. Therefore, they tend to report on second-order metrics (impressions, views, likes, downloads, attendees) that are difficult to square with financial value. They also tend to measure at the wrong granularity.
Ultimately what matters in marketing is whether the marketing efforts are generating financial value to the company. Any metric that is decoupled from financial value has an undesirable level of indirection. This is not to say that all metrics must be financial, but they must all be demonstrably connected to a measurable financial outcome.
The more ROI can be grounded in financial targets, the better the team can communicate the value of marketing within and outside the team, the more credibility it will have in justifying its budget requests and explaining its results, and the easier it is to communicate the impacts of budget changes. This is achievable, but it may require looking at the deceptively simple ROI calculation in a new way.
The high-level challenge of measuring MROI
Marketing ROI (MROI) is known to be difficult to measure. The concept is simple. Indeed, the formula is just a twist on a standard ROI calculation:
MROI = (Business value from Marketing - Marketing Investment)/Marketing Investment
The challenge that most marketers encounter is in consistently defining and capturing the data needed to fill in the variables in the equation. Let’s start with the easier of the two variables: Marketing Investment. What should that include? Let’s imagine a digital campaign— should you include the media buy? It seems pretty clear you should. What about the creative agency you used to make the content for that specific campaign? Yes. How about a prorated share of the content writer you have on retainer? She contributed to it, after all, but how much time was it exactly, and what were her rates again? What about a prorated share of the company FTEs? Corporate overhead? Meals for the meetings you had with the agency? A share of the SEO optimization platform costs? It’s tough to know precisely where to draw the line, but you can see that each of these costs changes the denominator and that’s going to change the ROI.
The other key variable in the numerator is Business Value from Marketing. Revenue seems like a clear indicator of business value. But is that one-time revenue or customer lifetime value (LTV) that you should care about? How about gross margin? Bookings value is good too, but you’ll need to map that to revenue formulaically. Pipeline? Opportunities? Impressions? Brand perception? Each step further up the marketing funnel, the more intangible a discrete measurement of marketing value becomes. Yet, we all know we have to carry out these activities high up the marketing funnel in order to influence the revenue that is realized at the end. Marketers want to provide data to quantify their impact, but they have to acknowledge that there’s a large sensitivity in their results that will yield a broad range of potential outcomes—and that data doesn’t hold up well under scrutiny from peers outside the marketing team.
Add to this core challenge the further complexities introduced by trying to measure traditional and digital channels consistently, tracing multi-channel campaigns, and attempting to compare your performance to industry peers, and the challenges just multiply.
Historical context of Marketing ROI
Here’s a quote from a recent article about shifts in marketing investment, published on the website Search Engine Land (our bold):
“While marketers should ideally address the full funnel, most no longer have the budget. Accordingly, they’re emphasizing performance campaigns because those are easier to track. Any spending that can’t be justified in terms of clear ROI is being cut in many places.”
This neatly encapsulates a major problem in the marketing function. Investing in campaigns because they can be measured is the wrong order of operations. We should invest in campaigns that meet the needs of the business and are aligned with our goals.
Marketers often refer to the John Wanamaker axiom, “Half the money I spend on advertising is wasted; I just don’t know which half.” We’ve heard this dropped into meetings in response to a question about the ROI of marketing investments. And it often works— everyone has a chuckle and the conversation moves on. Wanamaker’s comment is a good characterization of one challenge of measuring MROI, but it isn’t a reason to not try. Also, Wanmaker died in 1922. We can’t use it as an excuse forever, and we can’t just shrug our shoulders and fly blind.
On the other hand, the most dangerously misinterpreted quote in marketing (sometimes attributed to Drucker, sometimes to Deming, sometimes to Ridgeway - we settled on Deming) is, “What gets measured gets managed.” The reason it’s dangerous is that this is only half of his quote, and consequently it is misinterpreted as being an instruction. People think we should manage by what we can measure, and by implication, not manage by that which is difficult to measure. To make that point more explicitly, there is significant business risk in excluding from decision-making those criteria which are difficult to quantify with precision. The full text of Deming’s quote, sadly not usually provided in its entirety, makes a completely different point:
“What gets measured gets managed - even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.”
Here’s an example of that. Earlier in Dan’s career, he delivered technology that could automate a large number of customer service calls quickly, meaning they didn’t need to be handled by a costly customer service agent. Many of his customers, contact center leaders, would insist the only metric they cared about was reducing Average Call Handle Time (ACHT), the average duration of a phone call into the contact center. He would discuss this with them and suggest there must be other things that mattered, such as successful call outcomes, customer experience, overall cost savings and so on. But some customers insisted it was only about ACHT. When this happened, he would ask why they didn’t answer all their calls and then immediately hang up on their customers without talking to them. They’d achieve fantastic ACHT that way. The reason they didn’t do that was because they knew that would be a terrible business decision. The problem is, they were being managed by what could easily be measured. What they really wanted to do was to reduce ACHT while maintaining those other benefits like first-call resolution or customer satisfaction that they found much more difficult to measure reliably.
This is therefore a cautionary tale: beware of organizing around potentially irrelevant metrics. As Igor Ansoff noted, “Managers start off trying to manage what they want, and finish up wanting what they can measure.”
The marketing function contains a fantastic example of this: we started off wanting to measure and tune our marketing investments and mix, and we finished up with the pseudo-science of marketing attribution models.
Are these our only options then? Wanamaker’s world, in which we fly blind and accept the inherent inefficiency of our activities, or Deming’s, in which we labor under the false precision of managing merely by what we can measure while under-valuing things we know to be critical, but which are difficult to measure? No. We can do much better. Our path toward practical, valuable MROI measurement is based on four key elements:
Focus on big-picture, first-order ROI calculation
Carefully select meaningful metrics
Adopt a new, consistent approach to MROI measurement across your whole marketing plan
Baseline and benchmark your performance
Many marketers - many marketing organizations - measure second-order ROI. It is important to understand the difference between first- and second-order ROI. The table below illustrates the difference between them. The fields in bold are required to measure first-order ROI. The fields in italics impact first-order ROI, but their measurement does not capture or communicate ROI.
We will invest X dollars in
- Individual activities
(write a piece of content, design a logo, hire an agency, buy some media)
- Which roll up to marketing messages and deliverables
(digital assets, brand assets, eBooks, white papers, advertisements)
- Which are included in a campaign that is run
(TV campaign, integrated marketing campaign, customer event)
- To a targeted set of customers and prospects
(a market segment, installed-base customers, recent college graduates living within 10 miles of Chicago)
- By a target date
(July 1, end of Q3)
- Over a defined set of marketing channels
( TV, radio, digital, print)
- Until a certain deadline is met
(ad budget is consumed, target metric achieved, Christmas)
in order to achieve measure Y at volume Z.
First-order ROI questions ask, “Did we achieve our target measure at the desired volumes within our target budget?” and then ask whether it was worth it. For example, if we generate $1M of bookings from a campaign investment of $200,000, it’s a 5x ROI. It’s pretty clear that it was worth it.
Second-order ROI is replete with did-we-do-it (DWDI) metrics. These tend to be focused on activities rather than outcomes. They tend to be easy to measure too, which makes them seem attractive. But the siren song of DWDI metrics is foiled by the fact that they don’t tell you anything about the business outcome of your campaign. If you ask a colleague how their campaign went and you hear an answer like, “It launched on time with finalized positioning, and all the digital assets were completed by the agency, to spec,” they might be giving you DWDI metrics. What you really want to hear is something more like, “We’ve used 90% of our budget and we’ve achieved 60% of our Sales-Qualified Lead (SQL) target so far, which puts us ahead of schedule. We’re forecasting that we’ll overperform with this campaign.” then you are likely tracking first-order ROI metrics, because you will be able to calculate your cost per SQL, the average financial value of an SQL, and you will be able to compare it to other campaigns to assess both relative and absolute performance.
Many marketers have written about how difficult it can be to assess the ROI impact of marketing activities higher up the funnel, such as social media likes. Earlier this year we posted a blog series, covering the importance of goals-based marketing. We argue that there are really only three overarching objectives to marketing activity: improvings sales, awareness, or perception.
Based on that, below is a table showing the most common marketing goals, and how to measure success—both the measure (number, percentage) and the unit of measurement (customers, deals, lead).
Key metrics for common marketing goals
Note: LPO = lead, prospect or opportunity
Continuous versus Binary Metrics
You may have noticed that 100% of the metrics above are continuous, meaning they’re countable, have no upper bound, and they’re not binary (answered by yes/no).
Binary criteria are indicative of DWDI metrics (Did we launch on time? Was the collateral written? Did we approve the agency’s recommendations?) DWDI metrics often belong in a project plan, but they normally do not belong in your ROI analysis.
You may also have noticed in the table above that the number of different types of units to be measured is rather limited. This means that there are relatively few things to measure to get to the core of your ROI calculations. It’s not necessarily easy to measure them all the time, but it’s important to know the universe within which you’re operating.
As the list below illustrates, the only units of measurement that are required to assess the large spread of typical marketing goals can be captured by the 10 following units of measurement:
- Number of articles
- Number of customers
- Number of leads (or prospects or opportunities, depending on your definitions)
- Currency amount (revenue, bookings, pipeline)
- Number of days (deal cycle)
- Number of deals (new win, upsell, cross-sell)
- Number of mentions
- Percentage change (growth- NPS score or decline- churn rate)
- Number of people (survey or focus group respondents, social network connections)
- Number of views (pages, articles, white papers, gated downloads)
Prioritizing just 10 units of measurement is simplifying. And to put a finer point on it, there are five units for sales goals, four for awareness goals, and just two for perception goals.
While we don’t claim this is an exhaustive list of all possible marketing metrics to inform first-order ROI, if you set up systems to measure these, and they’re tied to well structured goals, then you are well positioned to capture first-order ROI metrics for a meaningful proportion of your marketing efforts.
Tying metrics to ROI
Now that we have our goals and we’ve selected metrics to measure those goals, we need to establish the value of those metrics. What is it worth to achieve one of the outcomes tied to our metrics?
Some of these are simple. For example, currency amount may be mapped to revenue, bookings or pipeline. For the sake of simplicity, let’s assume that the revenue we generate is exactly equivalent to the customer’s lifetime value (LTV). Hopefully it won’t be the case that LTV is equal to one-time revenue, but it helps keep things simple for now.
If you know the conversion rates for our pipeline and bookings, then it is easy to map metrics to business value. Let’s imagine that there is a 10% conversion rate of pipeline to revenue, and 95% of bookings to revenue. Then, you can state that:
$1,000,000 of revenue = $1,000,000 of business value
$1,000,000 of bookings = $950,000 of business value
$1,000,000 of pipeline = $100,000 of business value
Spending $100,000 to generate $1,000,000 of revenue or bookings is a pretty great investment. Spending that much to generate $1,000,000 of pipeline is a pretty terrible investment, because the best possible outcome is the same as the investment. And the outcome is not guaranteed. So, you’d be better off spending the $100,000 on something else.
Three principles of the Plannuh MROI model
Earlier in my career, I worked for an acquisitive company - we acquired over 100 companies during my tenure there. Barely a day passed without some kind of due diligence meeting somewhere in the company. In one of those diligence meetings, the CEO of a company we were assessing complained that we were undervaluing some of his company’s technology. He said that we were too focused on the P&L and were overlooking the “strategic value” of these assets. One of my colleagues challenged the CEO to describe a strategic value that didn’t ultimately show up on the P&L - either as a revenue or margin benefit. The CEO wasn’t able to. What he meant was that that financial benefit was uncertain and a long way in the future. With some modeling, all the “strategic” programs his company was carrying out could be traced into the future to tell us when the benefit should start to arrive. A sensitivity analysis could be carried out on what the potential range of outcomes might be. Then, based on time and risk, we could discount the value of those benefits and attempt to quantify the value today. We couldn’t do it with total precision, and we didn’t agree on some of the variables, but we weren’t flying blind.
Marketing plans and campaigns offer up a similar opportunity to the one highlighted above. They yield financial outcomes, and they may deliver value far in the future. These are two of the fundamental principles that you will need to support in order to be able to measure the true ROI of your marketing plan and its campaigns. If you don’t apply these concepts, it is difficult to measure the true ROI of marketing activities.
All marketing campaigns have an ultimate, quantifiable, financial target
Many marketers carry out their campaigns and then try to figure out retrospectively what the ROI was. This is the wrong way round. It is more effective to identify your target financial outcome (your return), and use that to inform how much you will spend on marketing to reach your target (your investment). You can only do that if you have identified the target financial outcome.
It’s obvious that a lead generation campaign has a financial outcome: identify and create leads that become prospects, then opportunities, then customers. Other types of marketing campaigns might present a less obvious path to a financial outcome. For example, a rebranding campaign might seem like something that isn’t directly tied to revenue. But, if we think in terms of where our campaign is affecting the funnel, and then follow the funnel to its end, there is always a financial outcome. From this angle, it’s clear that a rebranding campaign has a financial objective, it’s just further up the funnel - further away in time - from the financial outcome of increased sales. For a commercial company (vs a non-profit) the question is what marketing campaign would not have a financial motivation?
When thinking about ROI for your campaigns, it is important to zoom out far enough so that you can trace a line between the marketing activities of today to the financial outcomes of that activity through the funnel. Then you can get a sense for what the future looks like for your company if you do those activities or not. This brings us to the second fundamental point: time.
MROI is not tied to the fiscal year
Your budget begins on the first day of the fiscal year but your plan doesn’t. Imagine your fiscal year matches the calendar year. On January 1st, your pipeline is not empty. There are people in the world aware of your brand. Leads, prospects and opportunities exist at various stages in the funnel. Deals are being actively negotiated by sales. Marketing campaigns are underway from the previous fiscal year.
This means that some proportion of your marketing results for the fiscal year are already in the bag. From the perspective of this year’s budget, they feel free, but they were obviously funded from last year’s budget. It would be unrealistic to make a plan that did not fully take into account these carried over benefits from extant campaigns.
It would obviously be disastrous for your business if you only executed campaigns to create value in the current fiscal year (it would also be extremely difficult to do).
It’s important that your marketing organization, and your company’s executive team, embrace the notion that different campaigns have different value horizons and treat campaign investments as just that - investmentswith a return in the future. The marketing team’s job is to ensure there is a well-calibrated number of well-qualified opportunities for sales to close at all times, which entails working a marketing funnel that will usually operate out of step with the fiscal year.
Every phase of the funnel is worth the same as the financial target
If I have a revenue target of $1M for a campaign, and I need to close 10 deals to achieve that revenue target, it’s obvious that those 10 deals are worth $100,000 each, on average. Let’s step back one phase in the marketing funnel, and stipulate that I need to have 20 qualified opportunities in order to get to 10 deals. What are those 20 qualified opportunities worth? $1M. This is not an additional $1M, it’s the same $1M, because hidden in those 20 qualified deals are the 10 deals that will ultimately close. Another way of saying this is that it’s the same 10 deals at every stage of the pipeline, always worth $1M. The job of the marketing campaigns through the funnels is to find them, and filter out the rest.
So let’s keep going back, and say that I need 100 prospects to create 20 qualified opportunities. 100 prospects, collectively, are worth the same $1M. If I need 1,000 leads to get to 100 prospects, then 1,000 leads is worth $1M. You can’t achieve the revenue target without the preceding funnel targets being hit. 1,000 leads contain 100% of the value of the sources of the financial target, plus a lot of leads that need to be filtered out through the marketing funnel, and put into some nurturing campaign or lost. Every phase of the funnel - if its targets are achieved - is worth exactly the same as the final revenue outcome. This is a useful thing to bear in mind when you’re asked what the value of top-of-the-funnel marketing activities is. If you understand your funnel and conversion metrics, you should be able to quantify it.
Viewed this way, we can assert that, for this example, a deal is worth $100,00 ($1M/10); a qualified opportunity is worth $50,000 ($1M/20), a prospect is worth $10,000 ($1M/100), and a lead is worth $1,000 ($1M/1000). This is a crucial point to measure ROI consistently, and to be able to properly value marketing outcomes in the earlier stages of the marketing funnel.
Prerequisites for the MROI model
Here are some questions you need to answer before you can calculate ROI consistently.
- Will you measure return in terms of revenue or margin? Either may make sense depending on your business at a given point in time, but each will yield considerably different ROI’s from the other.
- What is your financial unit of measurement? Ultimately, it should be money, usually expressed as revenue. This may be one-time customer revenue, lifetime value, a percentage of LTV, and so on. Using one-time revenue for a one-time purchase obviously makes sense. For recurring revenue deals, some share of LTV makes sense.
- Example: My average deal size is $10K p.a. My average customer retention rate is 5 years. LTV is therefore $50K. If I use $10K in my ROI valuation, I will end up with an artificially low ROI. If I use $50K, it will be unrealistically high. 50% of LTV may be a reasonable measure to use in ROI calculation once I’ve considered the cost of customer support and renewals after the customer is acquired.
- What is your target ROI multiple? If you are seeking a 5x ROI and you have a clearly-defined financial outcome, then you can easily back into the implied marketing budget for a campaign, and an entire plan. Doing it this way gives you the chance to apply the sniff-test to the feasibility of a campaign. Does it seem achievable to reach target outcome with the implied investment at target ROI? That might save you from embarking on campaigns that had a low likelihood of achieving their outcome from day one.
- Note: You should not complicate the ROI model with time-value of money calculations such as net present value (NPV). There is enough uncertainty in the execution of the campaign over time. Time-value of money calculations in this context lend a false precision that is not worth the complexity.
The most important thing is that when you determine what you will use as inputs to the model, you stick with it for a long enough period to compare results over time, and across campaigns.
Worked Example of Marketing ROI calculation
In this example, we’re going to model a marketing ROI based on an integrated campaign to secure 50 new customers for a SaaS product. The average 1 year contract value is $10,000, and the typical customer retention rate is 6 years, yielding an LTV of $60,000. The business has an 80% gross margin.
After factoring in retention and renewal costs after the initial sale, the marketing team calculates that each lead is worth 50% of the LTV of the customer. The targeted return is therefore:
Return = 50 deals * 60,000 LTV * 80% GM * 50% value attribution
Return = $1,200,000
The team has a target ROI of 4, meaning their marketing investments should return 4 times the investment. The Marketing ROI calculation is as follows:
ROI = ($1,200,000 - Investment)/Investment
4 = ($1,200,000 - Investment)/Investment
We can impute the investment that would achieve this ROI at this target outcome as follows:
ROI = ($1,200,000 - Investment)/Investment
4 = ($1,200,000 - Investment)/Investment
4 * Investment = $1,200,000 - Investment
4 * Investment + Investment = $1,200,000
5 * Investment = $1,200,000
Investment = $1,200,000/5
Investment = $240,000
In principle, if you spend $240,000 and are successful in achieving your financial target, you will have achieved an ROI of 4. Now you must enter your funnel conversion metrics for each phase of your funnel and determine what top-of-funnel and mid-funnel programs need to be run.
Here are the results for our worked example (your numbers may vary):
If we need 50 deals, then based on conversion metrics we can estimate that we need 334 opportunities, 835 prospects and so on, up the funnel. If we change our assumptions about conversion rates or target outcomes, then the implied needs further up the funnel will change accordingly. If you don’t know the specific conversion metrics for your organization, it is better to do some research and make an educated guess than to not use them at all. By observing the results of past campaigns, it should be possible to at least land in the right ballpark.
You may recall our third principle of MROI earlier, that every phase of the funnel has the same value as the target outcome. Based on this, we can ascribe a value to every funnel outcome by dividing the funnel value by the number of outcomes required at each phase in the funnel.
Finally, we need to decide how much of our marketing budget we’re going to invest into each phase of the funnel. This is something that frequently does not occur as it should. It’s a common mistake to treat each phase in the funnel as its own discrete entity rather than as part of the larger engine which culminates in a target financial outcome.
The team will rely on its sales force to do most of the conversion from Opportunity to Deal. So it will only invest 2% of its budget into the last phase. It also knows from experience that it is relatively low cost to nurture leads through the middle of the funnel, so it dedicates 11% to convert prospects to opportunities, and 12% to convert leads to prospects. That leaves the remaining 75% for getting the leads into the top of the funnel.
Here’s what the funnel phases look like with this distribution of campaign budget:
Note that the total marketing budget sums up to our target $240,000 budget to achieve $1,200,000 of target financial benefit at a 4x ROI.
As the campaign is executed, we can calculate the ROI of each phase cumulatively through the funnel, as follows:
To understand this table, let’s look at the leftmost section, called LEADS, which represents the first phase of the campaign.
You can see that 75% of the budget has been allocated to this phase, which represents $180,000 of the available budget for the campaign. The target outcome is 4,175 leads. Because the value of the funnel is constant, you can calculate a value per lead of $287.43.
Unfortunately, when we look at the actual outcome of this phase of the campaign (in bold), we can see that we fell short, and only generated 3,976 leads. If we multiply out our value/outcome, that shows a funnel value of $1.14M rather than our target of $1.20M.
Because we’re dealing in real numbers, we can also calculate a target and actual ROI value for this phase of the campaign. Here, we have achieved an ROI of 5.4 vs our target ROI of 5.67 for this phase. Why does the ROI change as we proceed through the funnel? Because while the value of the funnel remains constant at $1.2M, our investment changes at each stage as we consume more of the budget. So the target ROI for top-of-the-funnel phases will always be higher than the ROI for late-stage phases. It may seem counterintuitive, at first blush, but it has to be the case if you follow a campaign ROI all the way through the funnel to a target financial outcome.
Although the campaign got off to a shaky start, you can see that you actually leave the 3rd phase of the funnel ahead of plan, and the team is able to close more deals than originally targeted, meaning that the overall campaign exceeds the target ROI—you aimed for an ROI of 4.0 and achieved an ROI of 4.48, 112% of target. Here’s a visualization of how the program evolved through the phases:
The actual ROI (yellow line) started off short of the target, but ended up overtaking the target and beating expectations. The next time a similar campaign is to be run, the marketing team should assess whether they had their assumptions about conversion metrics at different stages of the funnel wrong, or whether this was just natural variance that can’t be controlled for.
The next chart, below, shows how the campaign performed as a percentage of target ROI at each stage in the funnel. This allows the team to understand whether they have performance issues they need to address, and to ask themselves whether they staffed and sourced the campaign optimally.
Finally, we can see the evolution of the funnel value (the number of outcomes multiplied by the value per outcome). This shows that our funnel value ended up ahead of our target financial outcome, and this is what drove our ROI to be even better than the targeted ROI of 4. Note that the target financial outcome remains constant throughout the campaign. That is one of the principles of calculating the true ROI of the campaign.
The approach above applies to any marketing campaign—churn reduction, account based marketing, cross-sell and upsell, and so on. It also allows you to zoom out your ROI perspective and to pull together various marketing activities that cohere into a target financial outcome.
For example, it may not seem like a positioning program and a meeting generation program are part of the same effort initially, but they actually are different phases of the same overarching campaign to reach a financial target. As such, the entire ROI for that marketing funnel should be measured as a whole, both on a return and an investment level.
Baseline and Benchmark your Performance
It is important to understand how your campaigns are performing in absolute terms, meaning that you have an understanding of whether a given campaign is contributing what is needed to meet your defined targets.
It is also critical to measure relative performance over time. Is the team as a whole improving, holding steady, or declining, from an MROI perspective? Are there certain individuals whose campaigns overperform consistently? By maintaining a consistent approach to MROI across campaigns and over time, you can more effectively assess and communicate these measures.
There are several reasons it is worth taking a consistent approach to measuring MROI using the approach outlined above, including:
- You can place all marketing campaigns into the context of financial outcomes. If you find that you can’t do that - if there is no path from a marketing activity to a financial outcome - then you should question whether that marketing activity is a priority.
- You can communicate to your team and to the broader organization when and how different types of marketing will yield a benefit, and be able to frame how something that may seem difficult to quantify (e.g. downloads of a thought leadership piece) is actually an event that carries a specific monetary value.
- You can measure the performance of individuals in your team based on a constant funnel value. Even if the overall campaign is not successful, you will be able to see who was able to deliver on their phase of the campaign and who was not.
- You can organize what may initially seem like disparate marketing activities into coherent campaigns that culminate in a specific target financial outcome.
- You can better justify your marketing budget, and better justify your requests for greater investment.
- You can make quicker, better decisions on which marketing activities to adjust, or curtail, based on the ROI forecast against the target funnel value.
- You can seek out benchmark data to see how your results compare to companies like you - that’s where Plannuh comes in.
In this chapter, we’ve talked through the importance of being mindful about what you measure.
We identified that the best, simplest marketing metrics are found in a relatively small set of variables.
We emphasized that to measure first-order ROI, we must ground our marketing activities in specific financial targets. These are well understood by everyone, including non-marketers, and they communicate true business value. You may have to zoom out your perspective to see how best to connect marketing activities into coherent campaigns that reflect a true marketing funnel.
You should ensure that everyone in your organization fully understands that marketing campaigns do not - and should not - conform to the boundaries of a fiscal year: marketing campaigns from last year will help you this year; campaigns from this year will help next year.
You should adopt a consistent approach to MROI over all your campaigns, and measure performance in each phase of the funnel, and relative performance over time.
If possible, you should compare your MROI results to industry peers.
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