There is no shortage of information for marketers, yet this does not mean smarter decision making. Marketing campaign data is in advertising networks, CRMs, website analytics, marketing automation software, financial reports, and customer success analytics. The issue here is not the lack of information. It is the fragmentation of that information and the different definitions that are applied to various metrics and reports.
While one department might be concerned with lead quantity, the other might emphasize pipeline value, and finance would probably worry about revenue efficiency. But when there is no agreed-upon metric system, it is becoming harder to answer the essential question – what marketing efforts add value to the company?
In such an environment of budget accountability, companies require a more integrated approach to multi-channel marketing analytics. When return on investment is calculated the same way across all campaigns and all departments, managers can allocate budget better and reach faster decisions.
Perceptive’s POV
Perceptive Analytics regularly finds companies that spend lots of money on dashboards but can never seem to believe the numbers they see there. What’s not the problem in most cases? It is not the lack of dashboards – it is the lack of a common language for measurements.
Experience in such areas as marketing analytics, customer analytics, revenue operations, and executive reporting proves that best-performing companies always start with the standardization of key performance indicator definitions and the integration of basic data sources. Once the company understands what each lead, opportunity, stage of pipeline, or revenue attributed means, reporting becomes much more valuable.
The Foundations of Marketing ROI Measurement
Measuring marketing ROI starts with selecting proper metrics and knowing their benefits and limitations.
- Return On Investment (ROI)
A simple formula looks like that:
ROI = (Revenue Generated – Marketing Cost) ÷ Marketing Cost
It’s useful but sometimes oversimplifies complex processes and delayed conversion.
- Customer Acquisition Cost (CAC)
CAC represents an amount spent on acquiring one customer and helps to compare channels.
- Customer Lifetime Value (CLV)
It becomes more meaningful when acquisition cost is analyzed in light of long-term customer value. The article from HubSpot about marketing ROI calculation pays attention to connecting acquisition metrics and lifetime value instead of evaluating only conversion.
- Pipeline Contribution
For B2B companies, pipeline contribution is often more important than lead quantity as it represents future revenue opportunities.
- Conversion Rates
Conversion rates show where customers go further in the funnel and where they fall off.
- Payback Period
Sometimes the payback period of a marketing budget is even more important than ROI itself.
- Team Metrics
Team metrics that are useful include campaign implementation speed, lead response speed, content creation speed, and marketing to sales transfer efficiency.
One error in measuring performance relates to valuing vanity metrics like impressions, clicks, or social engagement without connecting them to bottom-line results. Other errors relate to valuing only the last click and thereby undervaluing awareness and nurture campaigns. The explanation of attribution models in Google Analytics provides a good explanation as to why different touches should be credited differently.
Maturity model for marketing performance visibility typically moves in stages like these:
- Ad hoc reporting
- Standard metrics
- Reporting integration
- Decision optimization
The latter stages allow the organization to see better how marketing contributes.
Tools and Platforms for Cross-Channel ROI Tracking
Most organizations have all the required technologies. The difficulty lies in integrating these technologies into one solution.
- CRM Systems
Record leads, opportunities, revenue, and customer success.
- Marketing Automation Systems
Enable campaign management, nurturing, segmentation, and attribution.
- Web Analytics Systems
Analyze website behaviors and conversions.
- Advertising Systems
Offer channel-specific performance metrics for paid media.
- Business Intelligence Systems
Generate integrated dashboard and executive reports.
- Customer Data Platforms (CDPs)
Combine customer information from several touchpoints.
- Data Warehouses
Unify marketing, sales, and operations data for further analysis.
- Attribution Systems
Allow first touch, last touch, multi-touch, and data-based attribution.
- Data Integration Systems
Integrate disjointed systems and eliminate siloed reporting.
- Dashboards for Executive Reporting
Provide leadership with an aggregated report on marketing performance and ROI.
The Adobe guide on measuring marketing ROI confirms that ROI is more tangible once the combination of CAC, CLV, and channel performance is considered. The Tableau article on marketing analytics also emphasizes the importance of having consistent data definitions behind any dashboard.
At Perceptive Analytics, we often provide assistance to businesses to aggregate their marketing, CRM, finance, and customer success data into one reporting layer.
Ensuring Consistency in ROI Across Diverse Campaigns and Teams
Achieving consistent ROI metrics depends on alignment among people, process, and technology.
- Agree on Definitions of Key KPIs
Everyone needs to be on the same page about leads, opportunities, pipeline stages, and revenue attribution.
- Define an Attribution Model
The organization should decide whether they use first touch, last touch, multi-touch, or data-driven attribution.
- Align Campaign Objectives
Each campaign can be focused on different things such as awareness, engagement, conversion, or retention, but all objectives need to align to business outcomes.
- Improve Collaboration Between Departments
Performance review should involve marketing, sales, finance, and customer success teams rather than be done in silos.
- Define Roles and Responsibilities
It must be clear who is responsible for which metric to avoid reporting disagreements.
- Develop Centralized Performance Dashboards
Unified dashboards help eliminate conflicting reports and increase transparency.
- Adopt Governance Processes
Definition of metrics, change management and reporting environment consistency should be governed.
The Mailchimp’s marketing ROI resource highlights the importance of connecting campaign metrics to revenue outcomes. This is also the area where Perceptive Analytics can help: very often inconsistent ROI metrics reflect a governance issue rather than technology one.
Turning ROI Data Into Better Decisions
Marketing ROI measurement is not about reporting. It’s about decision making.
With confidence in their data, organizations can make informed decisions based on ROI learnings and improve future campaigns and performance of teams.
- Redirect Budget to Better Performing Channels
Allocate more to those where return is most consistently high.
- Enhance Attribution Modeling
Verify if current attribution matches the actual customer journey.
- Determine Low Performing Segments
Utilize ROI to identify segments requiring different messaging/offers.
- Optimize Team Member Resource Allocation
Evaluate their contribution to results rather than their activity level.
- Improve Campaign Planning
Utilize historical ROI data for planning purposes.
- Align Sales & Marketing Teams
Same metrics ensure accountability and minimize conflicts.
- Assist Executives in Making Decisions
Unified performance view allows executives to evaluate marketing investments more easily.
Perceptive Analytics helps organizations to go further than simply generating reports and build analysis-in-a-capsule experience where leaders can discover performance drivers using easy-to-use filters and automatic verification.
Who Trusts Perceptive Analytics for Marketing ROI Measurement
Companies from various sectors select Perceptive Analytics since we integrate data integration, analytics capabilities, and domain knowledge into a useful solution for better decision-making.
- Global Financial Services Organization
Problem: Lack of insights about customer acquisition efficiencies.
Solution: We have performed a customer lifetime value engagement to help the team understand how much it costs to acquire a customer and the value of such an investment.
- Enterprise B2B Marketing Team
Problem: Lack of insights on revenue generation from marketing activities.
Solution: Lead conversion engagement improved visibility about which marketing efforts were converting and which were not.
- SaaS Revenue Organization
Problem: Incomplete reporting of funnel performance for marketing and sales.
Solution: Pipeline summary was a solution where both teams received a consolidated view about their pipeline performance.
- Customer Analytics Engagement
Problem: Limited knowledge of customer growth drivers.
Solution: Customer analytics engagement brought high-value customer segments to our attention.
- Digital Marketing Optimizer
Challenge: Challenges faced to maximize return on investment (ROI).
Impact: The AdWords spend optimizer allowed for the redirection of spending towards high-performing campaigns.
- Cross/Sell Analytics
Challenge: Inability to see areas where revenue could be expanded.
Impact: The cross-sell/upsell engagement highlighted areas where the revenue could be expanded.
Companies turn to us at Perceptive Analytics since we assist organizations in integrating their marketing, sales, finance, and customer success metrics into one performance view.
Next Steps: Building a Unified Marketing Performance View
Marketing ROI measurement can become much more effective when companies go beyond individual reports and develop a holistic perspective on performance metrics from campaigns, channels, teams, and results.
Best-in-class companies define standards for KPIs, unify data from disparate sources, define governance procedures, and develop reporting frameworks that will facilitate both operational activities and decisions by executives. All this helps to increase trust, improve decision-making speed, and make it easier to measure marketing performance from a business perspective.
Recommendations for Further Actions
- Evaluate your current process of marketing ROI measurement.
- List all marketing, CRM, analytics, and reporting systems.
- Standardize KPIs and attribution models.
- Develop a marketing performance dashboard.
- Define procedures for marketing governance.
- Read marketing ROI case studies and best practices.
- Discover ways to unify marketing analytics.
Use the Marketing ROI Measurement Checklist to evaluate your current measurement process and see where you can go next.