Do you measure your marketing return on investment with ROI key performance indicators?
ROMI helps to control the marketing spend versus investment cost into marketing. With the proper marketing ROI you can also adjust your marketing budget to the most effective return on investment ratio for your marketing activities.
The classic elevator encounter
When your CEO meets you - the Head of Marketing - in the elevator or on the way to the cafeteria: does he ask questions like:
“Hi Monica, on the top of your head: how many times do you repay your group’s budget?”
How about this for an answer:
“Hi Bob, almost 7 times. We generated more than 2’200 leads last year, resulting in 271 sales, delivering 19mio profit. Our budget was 2.9mio. I can send you my ROMI kpi dashboard and walk you through the numbers if you like.”
Do you have this answer ready?
Or will your CEO hear something like:
“Um, it’s not really that much straight forward Bob. For most of our activities we don’t really know whether a sale was triggered by a marketing hit or a sales call and our sales funnel doesn’t deliver very accurate figures in terms of qualified leads and conversion ratio.”
Will he accept that he spends a marketing budget into the blue?
Chances are that your CEO wants you to own not only the numbers but the leverage behind clear KPI measurements so you can adjust your marketing measures for maximum performance.
In this article you will find a ROMI (Return of Investment in Marketing) Key Performance Indicators (KPI) dashboard that establishes the clarity and confidence Monica has displayed in that first response to Bob above.
Marketing effectiveness accountability
Marketing has been exempt from stringent performance measurements for the longest time.
Partly because it was viewed as a “cost of doing business” function and many activities overlap with other commercial tasks. Partly because the Sales funnel did not pay attention to the level of detail that is available with today’s CRM systems and go-to-market initiatives.
With increasing cost control and competitive pressure however, c-level managers also feel the need to understand and continuously improve their investment dollars into marketing activities.
Since today’s customers own a larger portion of the sales process, marketing plays the key role to fill the inbox of the Sales department. With quality leads no less.
But how can the marketing head establish evidence as to how all the marketing communications and market research tasks perform?
On top, she will want to fine tune and adjust the budgets to not only increase the conversion rates but to focus on those programs that generate most quality leads per invested dollar.
Many marketers are at a loss when you ask them about the impact or effectiveness of their marketing budgets.
Closed Loop Marketing
Marketers need more sophisticated ways of measuring the effectiveness of their programs than simply counting website hits and email opens or present website heat maps at the annual sales conference. In order to truly understand the effectiveness of the entire marketing effort, the marketing department must be able to track everything that happened after the brand touched the customer prospect.
With closed loop marketing the entire chain of events that leads to a sale can be analyzed. This can be done on a specific marketing activity or even campaign level.
But to what extend does a marketing action influence a customers buying decision? In order to obtain this clarity, marketing must have visibility into where their leads end up in the sales funnel, and must be able to tie their marketing activities and campaigns to specific customers so they’ll know when a deal has been completed and how much marketing influenced that deal.
Moreover: what happens to the leads? Who qualifies them, how are they reported as closed deals?
This is where Marketing and Sales need to grow together by the hips and share a passion to own commercial performance measurements.
Part 2 → Marketing or Sales? Impact Attribution. →→