Marketing ROI is notoriously hard to prove. Even with all the inroads we’ve made in collecting marketing analytics, proving ROI still ranks as the top challenge marketers from businesses of all sizes cite.
Most businesses now have the means to measure the performance of their marketing tactics and campaigns in some way, which is a big step up from past days when the technology to do so just wasn’t there. The bigger challenge that marketing professionals still struggle with is figuring out how to tie those marketing analytics back to the money spent and the revenue coming in.
Gain a Clear Picture of Where Your Budget is Going
In theory, if you’re involved in creating the budget, you know where it’s going. In practice, being able to clearly see exactly where your department’s money is being spent is much harder. In any marketing organization, when you have multiple staff members managing a large number of campaigns, staying on top of the spending is complicated. Enterprise marketing organizations typically have to go several steps further and keep up with the spending of multiple different departments, each with their own staff, campaigns, and budget.
What you need to more effectively manage and track where your marketing budget goes is a marketing planning tool that lets you view everything in one place. Once you have a marketing performance management tool with a CMO-level dashboard, you can toggle between views that allow you to see the big picture of your budget spending when that’s what you need, and the more specific breakdowns of how that spending is distributed in different departments and campaigns when that’s what you need.
Track What Marketing Actions Result in Sales
This part’s even trickier than staying on top of where your budget spend goes, but it’s a crucial step to achieving accurate revenue attribution. Many marketers get caught up in intermediary marketing metrics like how many clicks an AdWords ad gets or how many shares a tweet receives. Those play a role in gauging success, but what’s more important is being able to connect those actions to eventual sales. That requires some really sophisticated technology combined with skilled marketing legwork.
It’s pretty easy to identify the last touch point of a customer before they make a purchase, but true revenue attribution requires going further. You don’t just want to credit the lead source or final action, you want to understand every interaction a lead has with your company from the first moment they encounter you to the moment when they give you that final “yes.”
Now, it’s not enough to track the interactions of one individual from a company, you need to be able to connect all the different contacts from one company that will have an influence on an eventual sale and pay attention to the different touch points of each.
For example, let’s say Lead Contact One from Company X encounters you at a marketing conference, is intrigued by the presentation she sees and visits your website when she gets home to learn more. Meanwhile Lead Contact Two from the same company independently comes across an educational blog post, likes what he sees, follows the CTA at the end to a landing page to download a whitepaper, and provides the necessary contact information for the download. The next week one or both of them takes what they’ve learned to their manager, Lead Contact Three who agrees that your product could be the solution to many of their challenges and sets up a demo for the whole team to sit in on.
With one lead, you have six touch points between three contacts, all before the lead moves into the sales process. All of those touch points deserve to be counted as playing a role in helping you gain that sale.
The difference between knowing that 3,000 people viewed your blog post and recognizing that one of those people played a role in helping get Company X to the point of a demo is the difference in achieving the level of marketing maturity that allows for accurate revenue attribution.
Consider Multi-Channel Attribution Models
It wouldn’t be quite accurate to say that making sure you capture all those touch points and attach them to the right lead is the easy part, but the next step can get even more complicated. The webinar your lead sets up likely deserves more of the credit for the eventual sale than the blog post – so how do you determine how much weight to give each action your lead took?
Marketers have come up with eight main models for addressing this question:
- First-touch attribution – Give credit only to the first interaction a lead has with your brand – in our example, credit would be given to the marketing conference.
- Last-touch attribution – Give credit only to the last marketing interaction a lead has with your brand –that would be the demo in this case.
- Evenly weighted attribution – All touch points are counted and given equal weight, so the total value of the sale would be divided evenly between them.
- Time decay attribution – All touch points are counted, but those that happen closest to the point of sale are given more credit. In our example, the demo would get the most credit, the whitepaper the next most, and the meeting at the conference the least.
- Position-based attribution – The first and last touch points are awarded the most credit (say, 40% each) and the rest is divided evenly between all the other touch points.
- W-shaped Attribution – The first touch point, the touch point where the contact converts to a lead, and the last touch point all get the most credit. The other touch points have remaining credit divided evenly between them.
- Interaction-based attribution – You determine which actions deserve the most weight based on your opinions and data about their worth. This one’s harder to get right, but if you have the experience and data to back up your opinions, it could potentially help you achieve better accuracy.
- Statistically Inferred Revenue Attribution – This is the way Hive9 approaches revenue attribution. While the other rules-based models are also supported, this is the most accurate approach, since it uses past data to strengthen your current revenue attribution. If your data on past performance shows that viewing a certain online demo almost always precedes a deal (and that’s not the case for lost deals), then you know to give the demo the greatest weight. If they show that downloading a whitepaper frequently leads to sales, but meeting someone at a trade show only does a small percentage of the time, then you know to give the former more weight than the latter. You have to have good data for this model to work, but if you do, then it’s the most accurate option.
There’s no one-size-fits-all solution here, but generally speaking the attribution models get more sophisticated and accurate as you move down the list.
Close the Loop: See What Spending Has Resulted in Which Sales
Because you’ve taken the time to track marketing analytics that clearly show you what each of those touch points cost, you can easily view how much of your spending helped lead to the sale and in what forms.
Because you also implemented the technology that makes it possible for you to track each touch point, attach it to this particular lead and their overall journey, you know to attribute each of those marketing actions to this final sale and the profits that came with it. You can then use your attribution model to help you further determine just how valuable each of those touch points was.
Now all you have to do is connect everything. You can see what marketing spend contributed to the profits and use that information to better understand which of your marketing efforts are paying off.
The more you do this, the better you’ll be at truly gauging what’s working. Not all of those touch points hold equal weight in a sale, but if one new customer after another comes into the fold after first encountering a specific piece of content or meeting a representative at a particular conference, you’ll see that those actions consistently pay off. With that knowledge, you can both prove the value of your marketing efforts to your CFO and improve your marketing plan as you go for better results.Icon made by Freepik from www.flaticon.com is licensed under CC BY 3.0