Attributing revenue and measuring ROI in marketing
In today’s business world, insiders estimate that it takes an average of eight touchpoints before converting a lead into a customer. Not surprisingly, this presents a bit of a problem for marketers as far as how to determine the effectiveness of individual campaigns as well as how to correctly attribute revenue.
Without being able to effectively measure our marketing efforts, how can we prove to the business how much value we’re creating? And without being able to measure the return on investment (ROI) for our efforts, how can we improve on it?
Although marketeers are increasingly directing their efforts towards digital channels, which is making it easier to track customer behaviour and actions, many are still struggling to really understand their conversion funnel.
When this is the case, it can be difficult to know where to begin. Fortunately, there are starting points and stepping stones:
- Set smart campaign objectives and goals – these should be specific, measurable, achievable, relevant, and time-bound – and outline how you can measure those goals.
- Ensure that you have tracking and measurement capabilities in place at each touchpoint (whenever possible, attribute the action back to the actual lead). The proliferation of marketing-automation technology has made this task much easier.
- Have a central data repository of all customer touchpoints and actions (for example, customer opened product A email on 28/05/2016, customer attended a webinar on product A on 15/03/2016, and so on).
Once you have the data, it’s time to have some fun with it. By observing both the sequence of campaigns that each lead was exposed to and the outcomes – whether or not the lead converted into a customer -- over time, we can apply multivariate regression analysis and assign a relative weighting to each campaign. In this way, we can determine the ROI per campaign and decide which marketing initiatives are worthwhile and which we should abandon.
For awareness-driving campaigns in which you cannot identify the leads that were exposed to your campaign, you can still estimate the scale of the marketing effort by observing the effect on test and control groups. For example, you might run an ad for a certain amount of time or limit it to a specific geography.
The proliferation of data has greatly improved the world of marketing by making us better informed marketeers. Once you embrace this new world, you can have lots of fun in your marketing efforts – and ultimately impact your bottom line.