“What’s the ROI?” is a frequently asked marketing question. The ROI question can best be discussed by backing up a couple steps to goals because the marketing goals (and results) will flow from the overall business goals and investment decisions. Let’s look at an example:
Say the business goal is 5% YTY revenue growth with 3 major components the company will adjust to meet this goal:
- Increase sales
- Increase inbound leads through digital
- New product launch
All 3 of these components work together and each one will require unique strategies and tactics. For example, the sales increase could be accomplished through adding new sellers, expanding the territory of existing reps, and adding sales support. The increase in leads through digital channels may be a function of paid-owned-earned investments like online ads, social media, content, and offers. A new product launch typically involves all aspects of sales and marketing.
Where does marketing fit?
Marketing plays a cross-functional role that is often difficult to separate from other functions because of the collaborative nature of the work.
- Sales: marketing may develop sales enablement, training materials, customer presentations, and customizable email content
- Digital: marketing may develop SEO plans, online offers, pay-per-click ads, and social and website content
- Product: marketing may develop white papers, blog content, messaging, press releases, events, and other marketing materials to support the launch
Below are examples of metrics that could be used to track the 5% YTY growth plan in our example:
- Sales performance, e.g. seller’s quotas
- New product sales, e.g. volume, and revenue
- Web traffic
- Offer acceptance
- Response & lead volume
- Total revenue
- Expense vs budget
- Individual tactic performance, e.g. PPC ads, direct mail, inbound calls
- Completion of key deliverables
- Brand awareness/engagement
Wondering about the ROI measurement?
Return on investment is a simple calculation when there are few variables. If I invest $100 in a stock and receive $110 when I sell, the ROI is 10%. In our 5% YTY growth example where marketing, sales, and digital are all part of one growth initiative and marketing plays a cross-functional role, it is much more difficult to determine the specific ROI of marketing. Not impossible, but measurement has an associated cost. And the real reason to measure is to make better decisions that improve results.
Here at Strategy, we recommend beginning with the marketing metrics that are most meaningful and affordable based on your business goals and marketing plan. Choose metrics that help you learn and improve and accomplish the business objectives. Don’t be sidetracked by a wish for a simpler ROI discussion, choose a few key objectives and get started. We’re here to help!