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There are five levers in a predictive ROI formula:
- Improving Conversion Rates: Improved conversion rates in either lead or opportunity stages increases ROI
- Higher Win Rates: Increase in conversion rates of closed won deals – primarily influenced by company-fit and intent
- Improving Sales Efficiency: Higher sales lead capacity and connect rates result in additional opportunities and more increased number of at bats – influenced by less time prospecting and improved data quality
- Decreasing Cost of Acquisition: Higher conversions and rep productivity spread costs over a higher number of customers, lowering CAC ratios
- Increasing TAM: Expand existing TAM by sourcing net-new prospects and reaching them via new channels
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We tested several models to find the “shape” that best describes the data. We found that the relationship between CX and revenue potential tends to follow three main shapes:
- Linear. CX and revenue move in lockstep. Whether you improve a poor experience, a mediocre experience, or a good experience, the impact on revenue will be the same.
- Diminishing returns. Revenue potential increases sharply when poor experiences are improved, but it tapers off at higher levels of CX. Fixing poor experiences will have a bigger impact on revenue than optimizing good experiences.
- Exponential. Revenue potential remains relatively flat when poor experiences are improved, but it begins to increase dramatically at higher levels of CX. Making good experiences great will lead to larger revenue gains than making poor experiences OK.
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Let’s dive into some key B2B lead conversion-tracking methods for win-win clarity.
1. Lifecycle Stages
2. Source & Cost Attribution
3. Goal Ramp Incorporation
4. Monthly Recurring Revenue per SQL
5. Months to Payback
6. Multiple views of the above data
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- CLICK-THROUGH-RATES ON EMAIL MARKETING CAMPAIGNS
- CONVERSION RATES
- VALUE OF SITE INTERACTION
- SOCIAL SHARES
- ROI
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Let’s get to the math:
The majority of CEOs today – nearly 70% – believe that CMOs should be leading revenue growth.
More than half of this group goes so far as to name revenue growth as the primary mandate of marketing.
Another 23% are on the fence, feeling that, to some degree, marketing should be measured by revenue performance.
This is all according to a report that was co-written by the CMO Council and consulting agency Deloitte.
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In general, email continues to be the most cost-effective choice when measured up against other digital marketing tactics. Email had a median ROI of 122%, according to US marketers polled June 2016 by the Data & Marketing Association and Demand Metric. Email’s ROI was well above those for digital marketing approaches like social media and paid search, the study found.
Small- and medium-sized (SMB) retail businesses are especially drawn to email marketing. A March 2016 study by WBR Digital and emarsys, found four-fifths of the US SMB retail professionals believed email helped contribute to both customer acquisition and retention—well above the percentages of respondents who said the same of other digital tactics
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Here are three major benefits of consistent content marketing that no report of hard data will ever show you:
1. One-to-one connections with industry peers and partners
2. A more humanized, approachable brand
3. More educated and engaged team members
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Budget remains a very big stumbling block for many CMOs who want to accelerate their digital marketing efforts. The best way for CMOs to access increased budgets is to effectively link the increased spend to improved business outcomes. This means creating a foundation of linking marketing activities to the business goals. CMOs have never been closer to this opportunity.
Their leadership peers – CIO, CFO and CEO are totally aligned with this goal.
By engaging with the CFO to look for the key linkages of marketing activity to business outcomes they can be sure their metrics will have attention. The CIO can help automate data flows, link the disparate systems and look for cost efficiencies so that when marketing performance improves it is clear.
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A June 2016 survey of US marketers conducted by the Direct Marketing Association (DMA) and Demand Metric found that email had a median ROI of 122%—more than four times higher than other marketing formats examined, including social media, direct mail and paid search.
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Social media ad spending continues to grow in the US, with eMarketer forecasting the format will make up more than 20% of digital ad spending by 2017. Yet even as marketers’ social media budgets increase, many are still struggling to make sense of its overall impact on their business.
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Zoom on marketing chart titled: Chart/table from: CMOs Not Making Headway With ROI Proof. And No More Willing to Use Analytics.
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There are various attribution methods; here are a few:
- Equal weighting (as demonstrated above)
- “Time decay,” or giving the most weight to the most recent channel
- Algorithmic: based on millions of data points to help determine how much the presence or absence of a particular channel in a purchase path affects the final conversion; weight is then assigned to each channel based on where in the purchase path they appear
The most important thing to note is the re-allocation of transaction value between different channels. We should make sure that the total transactional value arrived at using the chosen attribution method is the same as if the last-click attribution method was used.
This re-allocation is not a manual exercise, but something that is done via an automated system after learning the weight of each channel.
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In order to combat this fragmented consumer view and measurement challenge, some companies like Vodafone are trying out an approach called “experimental design.”
As Vodafone’s head of brand strategy David Still explains, if you want to prove whether something works or not, you test it out by taking it away. If it really works the way you think it does, you will see the effect when taken away. And this is what experimental design can help marketers find out, according to Still and Baker.
Baker describes experimental design as a series of “continuous experiments where media volumes and types of investments are continuously varied,” allowing marketers to measure and understand which investment has a “causal relationship” with sales.
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Using Sales Cloud (the most mature product) respondents report average increases in sales productivity by 41%, conversion rates by 44% and sales of 39%! This can easily be attributed to the increased adoption and much friendlier user interface. With mobile capabilities and anytime, anywhere access Sales can enter, check and follow-up on opportunities on a virtual basis. Adoption leads to usage and more productivity which bumps up the converted opportunities as well. Increased conversions provide the numbers to attain more sales. Is it any wonder sales executives have been willing to jump at the chance to bypass their IT organization and leave their on-premises system behind?
Results for Marketing Cloud are similar with average increases in marketing ROI of 50% according to respondents. Campaign deployment times increased by an average of 51%, a good explanation of the increased ROI. Any marketer will tell you if they improve campaign efficiency they can run more of them and generate more leads which is exactly what the respondents reported with by an average increase in leads by 49%. Could these increased lead numbers have impacted the increase is opportunities mentioned earlier? Of course! Hence the benefit of an integrated sales and marketing system working in tandem in the cloud that nurtures simplicity and adoption.
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"1. Incremental Revenue – How Much Revenue Will it Produce?: Start by asking the vendor for case studies that prove their clients have used the solution to drive revenue for their brands. 2. Total Cost of Ownership (TCO) – What are the 'Big Picture' Costs?
3. Return on Marketing Investment (MROI) – Is it Worth the Additional Investment: This critical metric is simple to calculate: take the incremental revenue and divide it by the TCO from above, and that provides a ratio of value to cost.
4. Net Present Value (NPV) – Will the Investment Make A Profit?: This is an absolute “must-have” when getting approval from any finance group — calculating a three year NPV is how most organizations choose between investment alternatives. NPV is essentially a way of determining the net profit of an investment, and takes into account all of the potential revenue, cost and cash flows from each alternative.
5. Payback Period – How Long Will it Take to Pay Ourselves Back?: It will absolutely turn heads when a marketer can confidently say, “We expect that we’ll recoup this investment within X months of implementing the solution, based on the case studies documented by the provider.” "
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It’s an old trope of the Search Engine Optimization industry that SEO is the channel with the greatest return of any online marketing channel. But, given Google’s increased ability to identify and penalize sites employing poor-quality link-building practices, my experience in the new business trenches with QueryClick (my employer) tells me that many agencies today are failing to deliver return for their clients. And, in some cases, they report fantastic ROI figures despite presiding over declining organic traffic!
If you oversee SEO and want to get a true picture of your (or your agency’s) real return on investment improvement, what criteria do you need to use? Though this is a seemingly simple question, it’s a very important one to ask because SEO truly can — and should — be at the very core of your online marketing strategy.
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Increase your conversion rate optimization (CRO)
If you do one thing to lower your customer acquisition costs and improve ROI, make it conversion rate optimization. It’s most always the best place to begin.
Get more organic traffic to your website
Write better copy
Stronger, more persuasive copy can be the catalyst for improved conversion rates, higher average sales, more frequent sales, better reviews, more referrals… the list goes on and on.
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Demonstrating the impact of marketing when performance is the result of cross-functional efforts requires three elements:
- Show performance of shared impact metrics. Whether the goal is increased deal velocity, better renewal rates or improved customer loyalty, you need to demonstrate that the impact metrics marketing invests in are, in fact, improving.
- Provide proof of marketing participation. You need to prove that when marketing tactics are accepted by target audiences, impact metrics improve. If marketing isn’t involved, it will be uncomfortably difficult to assert any type of marketing influence over that performance improvement.
- Present evidence that performance metrics change as marketing participation changes. Evidence of marketing impact requires a comparison. Some deal cycles may have light levels of marketing interaction, some may have heavy levels, and some may have no marketing interaction at all. When you compare what improvements take place when marketing is present to what happens when marketing is not, you can develop reasonable proof that marketing is making a difference.
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Your firm may have capability to produce many - or all of these metrics - but are you using them to improve customer experience and business value? Several vendors we’ve talked to recently, who represent a cross-section of digital measurement technologies and services, described what they hear about this from prospects and clients. A (scary) summary: the firms report that they now have boatloads of data and a growing number of digital measurement technologies, mostly in silos – but don’t think they’re getting enough value from what they have. It’s as if some firms are paralyzed. This can’t continue. Operating silos of separate digital measurement approaches is not good enough any more. You risk falling behind competitors who are successfully combiningg approaches and continuously maturing their digital intelligence.
Mature digital intelligence requires identifying the business metrics that matter most and combining and aligning measurements that move the needle. Use the digital intelligence framework to guide you in changing an outdated “measure in silos first, understand the total effect later” approach. The report lays out the business value and examples of each metric and gives examples of how to use them – and even more importantly, how to combine them. Get started now with colleagues to work across the measurement silos - or more of them - to drive more value.
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ROI also forces a skewed perception that slants toward short-term results.
The problem with this is that most modern online marketing strategies rely on accumulated payoffs that grow over time. For example, in content marketing, one good piece of content doesn’t offer a one-time return upon publication. It can be syndicated, expanded, and even left alone to continue compounding its value. Theoretically, every piece of content you create will carry value for you indefinitely in the future, meaning your ROI measurements are biased in two ways. You’ll always be measuring the present benefits of past efforts in addition to present efforts, and you’ll never measure the full potential your campaign has.
You need to compensate for this when thinking about the “value” of your marketing campaign. Measurable ROI alone isn’t enough to accurately capture the entire significance of your campaign—at least for long-term strategies like SEO, content marketing, or social media marketing.
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"Integrated CRM Make sure your sales team is aligned with your strategy and effectively following your leads through the funnel. Your platforms, such as social media management software, should be flawlessly integrated with your marketing automation and your CRM platform, such as Salesforce.
Proven Technology
Analytics are driving so many marketing strategies as of late, it’s surprising companies got by without them. While all marketing automation platforms have some form of analytics, you can also have a separate program to strengthen your comprehension of what works and what doesn’t. Having a proper analysis platform can take a statistics-driven plan to the next level. Some statistics hold more weight than others and can have a positive impact on aiming content to your audience or understanding customer needs. Engagement is a huge part of this, so make sure to look for an analytics program that includes numbers about user interaction."I sco marketingIO: One Source for All Marketing Technology Challenges. See our solutions.
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You really need to CT to understand this. Excellent material.
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