Measuring ROI of Your Demand Generation Marketing Programs

Measuring ROI of Your Demand Generation Marketing Programs

by Jason

Most demand generation measure is retrospective in nature, analogous to driving a car while staring at the rear view mirror and savvy marketers know too well that what worked well in the past is no guarantee of success in the future. Return on marketing investment, demand generation marketing performance and accountability is top-of-mind for almost every B2B marketer today, yet rather than looking towards what they can do to help their sales team sell, marketers are still trying to justify the existence of their programs.

The key really is not just to look retrospectively but also to the future and ask ourselves why we are looking at measuring our marketing performance in the first place. Are we measuring our metrics to simply justify our existence or are we chasing to measure our contribution towards growth, revenue and profit? Just as sales teams are measured by their ability to bring in or grow customer relations, then similarly, marketing are now being asked how they are helping the sales team get into the right opportunities.

The concept of Performance Based Marketing is nothing new and has been at the tip of every Chief Marketing Officer's tongues for several years now and quite rightly so. The better that marketing demonstrate the incremental contribution to profits and shift the focus from marketing as an expense to marketing as an investment , the better marketing will be able to demonstrate stronger alignment to the business.

Performance based marketing and ROI of demand generation activities has been a highly unsolved challenge, because it is fraud with challenges, not only because you have to know what to measure and how best to measure it but also because there are multi-departmental (sales, marketing, finance and channel) interfaces at play that need to be appreciated. Furthermore, there are also intangibles such as the softer aspects to marketing such as awareness building, which absolutely need to be factored in when determining overall performance.

Yet, there are meaningful ways to look at marketing with the objective to better qualify your marketing activities and measure your performance. This article provides a high level outline to not only get you to consider suitable measurement approaches to your activities but also understand the key undering profit drivers and best practices to improve your marketing demand generation performance through a result based mind-set.

Dimensions of Demand Generation ROI Measurement

ROI can be typically considered across three different dimensions – at the campaign level, at the customer level and at the corporate level:

At the campaign level

This is the simplest level of analysis and involves investigating the costs of any given campaign and offsetting these against the incremental return achieved. Nothing more than a spreadsheet is needed for such a calculation, although if a campaign is more complex, then a database solution such as a CRM solution is more practical.

But marketing ROI calculations at a campaign level are typically over-simplistic, not least because business-to-business customers interface with organizations multiple times and across different communication mediums as they move through the buying cycle. However it is worthwhile to use campaign level analysis for initial metrics measurement such as mandates generated, number of qualified leads and costs per lead and use this intelligence for comparatives against other campaigns when considering an overall marketing portfolio approach to your campaigns.

At the Customer Level

Analysis at the customer level is designed to address some of the shortfalls of the campaign level approach, wherey all customer marketing and sales activities are tracked to a central system of record, a database or a CRM system. The premise here is that by tracking all the activities involved to move the customer from 'initial contact' to 'sales ready' to 'sales closed' stages, the company can apply most if not all marketing costs associated with selling to any particular customer. This concept is seeded in the financial principles of Activity Based Costing (or ABC analysis) and designs strong processes and collaboration between sales and marketing. There are now solutions under the banner of 'marketing automation' which can assist sales and marketing departments with integrating such touch points (web, email, events, telemarketing and so forth) against a customer database. But whilst technology can be a viable enabler for improved marketing performance and greater alignment, it in itself is not a panacea. More important are how people, processes and technology can come together to build effective demand generation programs and allow the organization to drive a healthy profit as a result.

The downside with the customer level analysis as well as with the previous measurement at the campaign level, is that both still ignore the elusive softer marketing activities such as PR and awareness building, which are far difficult to measure accurately against any specific 'sold to' customer.

At the Corporate Level

Corporate level ROI analysis progresses the concept even further and now factors in all the elements of the marketing and communications mix towards financial achievement of the business goals. It takes a much higher level view of the all company's marketing activities and how successful the culmination of the marketing, demand generation and communications efforts have been towards generating desired marketing ROI. This is a useful template to use when evaluating progress against plan and will provide the marketer with the necessary framework by which to have meaningful discussions with sales and finance and the CEO around the success of marketing initiatives.

CONCLUSION

The adage of 'what you measure is what you get' certainly holds true for improved marketing and sales performance and any organization looking to achieve improvements in this arena, does not need to weigh up the necessary data collection infrastructure, processes and systems against the level of detail and accuracy required (there is a trade-off to be made between cost and resources of data collection and the level of accuracy against the business benefit).

Source by Simon H Shah

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