Measuring your marketing efforts provides powerful results and benefits, but only if you are measuring the right things.
A solid marketing strategy should support a firm’s goals, whether that be growing revenues, increasing profits, attracting or retaining top talent, expanding service lines, or gaining market share in a particular industry sector or geographic region. Marketing is an investment in the future. As with any other “investment,” the only way to determine if the selected strategy is successful is to measure the results – the return on investment.
When thinking about marketing ROI, you should really think about it in two ways: overall marketing ROI and individual measurements. Measuring overall marketing ROI presents a holistic view of your marketing performance while individual measurements enhance decision-making around specific marketing activities. Add a healthy dose of common sense, and you’ll get a better understanding of how to invest your marketing resources.
Sales or “buying” cycles vary depending on your firm’s services and client base. For many professional service firms, the buying (sales) cycle can take months or years to close, particularly when selling more complex service lines. One of the consequences of an extended buying cycle is that firms often have multiple “touches” with prospects making the process of measuring ROI more complex since one cannot clearly attribute results to a single marketing activity or campaign.
Let me give you an example: Suppose your firm is an exhibitor at a conference. An attendee stops by your booth and you engage in conversation, identifying that this individual meets your new client criteria and they may have even expressed a need (relatively easy to measure by counting the number of booth visitors, number of leads, and number of follow-up meetings attained). After the conference, they follow your firm on Twitter or Facebook (easy to measure via social analytics) and perused your website (easy to measure via Google Analytics). From there, they sign up for your newsletter (easy to measure via the analytics of emarketing services like MyEmma or Constant Contact or via your marketing automation tool like Act-On or HubSpot). Then, the prospect attends a webinar and checks out all your other social media channels (you can view this through Google Analytics or marketing automation tools). A few months pass, and you continue to see their activity on your social media and website. Say they register for another webinar and finally begin to reach out for more information. You meet with the prospect and build a relationship. Eventually, the prospect requests a formal proposal and you win the work (eight months after the initial meeting at the conference).
Here’s the challenge: Which of these touch points should receive credit for the new client and subsequent revenue? Should it be the conference where you initially met? The webinar since that seemed to have led to an RFP? Or, perhaps it’s the meeting you or your business development person held with the prospect.
What to measure?
As you can see, it’s often difficult to attribute revenue to a specific marketing touch point. Because of this, there are two different thoughts regarding how to measure ROI – direct or indirect revenue attribution.
- Direct: All revenue is attributed to a single marketing touch point – typically allocated to the first point of contact (in this case, the conference).
- Indirect: Instead of attributing all of the revenue to one touch point, indirect revenue attribution evenly distributes the revenue across the multiple touch points (in this example, the conference, the website, webinars, newsletter, social media, etc.).
The research does not support one method over the other. We recommend the use of both methods when calculating ROI to more accurately measure program effectiveness. Using both methods actually presents a more accurate picture of which touch points generate the greater percentage of qualified leads (Direct), as well as the methods that serve to nurture prospects through the buying cycle (Indirect).
When to measure?
The important thing here is that you measure. Every type of marketing is measureable and has its own tool or formula to track success or failure. What it comes down to is identifying the right metric and tool for the activity at hand in order to get the most out of the measurement. You also need to look at programs at different points in time. Some marketers only measure their programs immediately after deployment. In doing so, they often get a skewed view of the tactic or campaign’s effectiveness and miss critical indicators. We believe you need to look at metrics during the following phases:
- Immediately. Did you get the responses you expected? Look at successes, targets (qualified leads), investment per target, demographic score, and so on. If the results or engagement weren’t what was expected, there is time to make adjustments.
- Two to four months. Did the program generate leads or opportunities? It might take two to four months (or more) for a program to generate opportunities, particularly since the timing in professional services marketing is such a huge factor. Look at your company’s historical data to get a sense for when you can expect to see opportunities.
- Periodic reassessment. You will likely be getting successes and opportunities way beyond the initial program deployment, especially if it’s a longer-tail program (like a big event or a large content effort). Make sure you are constantly assessing how each program is doing over time.
How to measure?
Calculating marketing ROI does not have to be a mystery. If tracked, interpreted, and reported effectively, firms will have a better understanding of their marketing investment and efforts. Firms that ask, “How do I know if this will work for my firm?” or “How do I know if participating in this tradeshow is worth the time and money?” are beginning to understand and recognize (as they should) the benefits of calculating marketing ROI.
That being said, measurement can be as simple or as complicated as you make it. Don’t measure simply to measure. If you are unsure of what to measure, ask yourself:
- Will this support my marketing plan and ultimately my firm’s business plan?
- Will these metrics be actionable? Will I be able to refine or improve my activities, spending or decision making based on this measurement?
If you answer “Yes” to both of these questions, the measurement will be valuable.
The formula for measuring marketing ROI is pretty straightforward: The revenue attributable to marketing, divided by the marketing dollars invested.
To better understand your marketing ROI, you should also consider supporting measurements such as cost per visitor, cost per lead, and cost per proposal. Additionally, you might measure your conversion rate or close rate. This information can help your firm decide if the investment in time, resources, and money was worth it. A more complex measurement accounts for the resource allocation, as well (how much time by how many people went into achieving the results.)
In summary, remember one should not measure just to measure. Know what you are measuring, why you are measuring, and how the measurements are to be utilized. Decide on a select few key performance indicators for each marketing activity, measure them monthly/quarterly/annually, and integrate them into decision making.
Finally, always look at the big picture and differentiate between activity and results. Marketing without results is just noise. Data without action has no value.