Using ROI to Optimize Your Marketing Spend

Face it: effective marketing often costs a lot of money. There are so many directions to go with marketing tactics, and some will be more effective than others. The problem is, we don't know what will be effective for our brand, our product, and our market. Measuring return-on-investment (ROI) is a useful way to measure the potency of marketing campaigns.

Locating Where the Marketing Budget is Spent

The first step in measuring ROI is assessing the 'investment' portion. Knowing where marketing budgets are spent is the only way to really know if campaigns are worth the cash and time invested.

Koen De Witte from Lead Fabric (@LeadFabric) offers the reminder that the top of the funnel should not get all of the attention (and investment): “Sales cycle and buying journey don’t live in the same dimension. By now most marketers, modern or not, have learned that the buyer’s journey should be front and center in everything they do, including planning campaigns and programs. We often see vendors and thought leaders visually draw a buying cycle on the same horizontal axis as the pipeline and sales cycle. As if the start of a buyer's journey is always located at the top of the vendor’s sales funnel.”

De Witte wants marketers making new plans and analyzing past performance to “mentally and even visually start drawing the sales pipeline in one direction, e.g. horizontally, and the propensity to buy in, for example, a vertical direction. The result is a two dimensional grid. Spend should be not only allocated at the top left hand side, but across the entire line. Marketing spend should be more carefully allocated across the grid.”

Calculate the Ratio Between Costs and Demand Generation

Merely knowing where marketing money is going is just the beginning. After you have discovered exactly how the marketing budget is being spent, Paul Mosenson of NuSpark Marketing (@nusparkmktg) recommends lining this up with specific demand generation trends. “You’re really measuring the ROI of lead nurturing via email for the most part. Let’s go ahead and assume you do have a process in your organization to measure sales, revenue, and LTV of the leads that came through demand generation and inbound marketing efforts over time.”

Next, Mosenson advises adding up your costs. “You have to budget the cost of the marketing automation tool, and of course the cost of any content utilized for lead nurturing. If you can take a time period and calculate the ratio of costs versus demand generation revenue, you can begin measuring a lead nurture ROI.”

Moesenson advises you to then use this data to inform your future marketing spend. “Carefully measure the sources of the leads that eventually become opportunities and sales, perform a cost per conversion analysis as well, and tweak your campaigns to obtain the most efficient results.”

Mosenson also recommends to not overlook these key performance indicators:

Tools for Measuring ROI

There is a reason so many marketing and sales tracking tools are out there. Automating marketing measurement with great programs is efficient, and gives clear and actionable feedback when properly set up.

For Sam Boush of Lead Lizard (@leadlizard), the smart use of tracking tools will “not only capture the originating source of the lead, but also what touches ultimately resulted in the 'Closed Won' opportunity. Capturing these touches allows marketing to get a true perspective on the attribution of each campaign, and can ultimately give marketing insight into what campaigns are worth budgeting for.”

Happily, the plethora of available tracking tools means that there's no need to track all of this manually. Boush’s “favorite tool for calculating this is FullCircle CRM which leverages the campaign object in Salesforce and allows for specific weighting of each campaign touch. Other tools that are helpful in this are setting up a campaign hierarchy in Salesforce utilizing Marketo's Revenue Cycle Analytics.”

The Sales and Marketing ROI Feedback Loop

After finding precisely where marketing money is being spent, aligning it with the sales it generated, and evaluating this data using effective automation marketing tools, feedback from the sales team can help marketing evaluate the overall effectiveness of marketing campaigns.

As Trish Bertuzzi of the Bridge Group Inc. (@bridgegroupinc) explains, “sales can help marketing with their ROI by creating and implementing a process that delivers back information on what campaigns work and what campaigns don't. This delivery loop should provide details and not just be based on aggregate results. For instance: What titles responded to the campaign, and are they too high or too low based on prospecting efforts?”

Since both soft and hard data from the sales team can inform your future efforts, Bertuzzi further recommends that you ask if there are “companies that responded in the sweet spot for selling? How many of the leads entered the pipeline? What type of nurture tracks need to be developed for those that did not enter the pipeline but were the right buyer and company profile? In the ROI game, the devil is in the details - and sales needs to provide them.”

Make the Most of ROI Evaluation

Taking all of this in, we can see how important it is to measure the effectiveness of every marketing dollar spent. By evaluating the ROI of specific marketing tweaks, you can create powerful campaigns for your product and market. Ensure that you don't throw away any more money on marketing that doesn't generate sales down the line; invest in a solid ROI evaluation process today for more effective marketing and sales tomorrow.

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