Using Influence as a Marketing Metric to Measure ROI
Does the term only exist so that us marketers could prove our existence… our worth to the rest of the organization? Or does it even matter what the organization feels about marketing; since every other organization in the world seems to have some sort of marketing department? And so, often I would find marketing would mean creating flyers. Or worse, doing support tasks for sales teams.
Due to scenarios such as these, Marketing ROI quickly became the de facto standard for proving the value and worth of certain marketing activities. It became a quantifiable way to prove that what we did as marketers – mattered.
The problem however was that no one really knew what exact numbers and metrics to look at! What’s lacking, even to this day, is a good understanding of what metrics work for a business and what don’t.
Having been in B2B marketing for many years, I have come to understand that some activities can be tangibly measured and some cannot. I also believe that some things do not need to be measured on a constant basis. Knowing this is powerful as it keeps you from being distracted and reduces overhead.
Einstein knew what he was talking about when he said “Not everything that counts can be counted, and not everything that can be counted counts.”
Things to consider about metrics and ROI:
1. What is most needed is a focus on determining what marketing activities deserve an investment to drive incremental sales and revenues. THAT is what we’re trying to determine here… the specific activities that deserve an investment, what activities/ channels are the most lucrative, and how much that investment should be. We’re trying to find the most optimal investment.
2. Secondly, you need to understand (and convince others if need be) that ROI comes in two sizes: long-term ROI and short-term ROI. Short-term ROI is usually simpler to track, is less convoluted and provides instant feedback (and gratification) on whether your campaigns and efforts are working or not. Part of the process is to pick a method that you can actually adopt and make decisions from. Hence, both short-term analysis and a long-term analysis perspectives come in handy for different reasons. We’re basically looking for trends and short-term trends can help us make those immediate, tactical choices and help fine-tune campaign assets. Whereas, longer term trends help us strategize, plan and demonstrate a broader sphere of influence.
3. As your business and growth strategies change, so must your marketing metrics. When a business adopts certain metrics and wisely benchmarks against previous results, often people conveniently forget to iterate those metrics as the business evolves. Don’t let this creep up on you!
The role of marketing:
I think you will all agree when I say Marketing and Sales teams need to work closely together (if they dont already). As B2B marketers, our main role is in facilitating and reducing the sales cycle. I mean, thats what any marketing activity is done for – to facilitate sales, no? Therefore, all types of sales enablement efforts such as generating leads, advancement of conversations with prospects and reducing the time it takes to close a sale etc should continue to be our top priority.
To provide a frame of reference, a typical marketing-sales lifecycle looks like this:
Shift in the buying process:
However, with the internet and poliferation of digital media, consumers and buyers have lost faith in traditional means of making buying decisions. With everything being so connected and multiple touch points between vendors & buyers as well as existing customers & prospective buyers; the entire buying process has become dispersed and fragmented.
A shift has occured from push strategies where products are produced and pushed on to customers, to a pull market place in which customers get informed and educated in large part by engaging themselves with other customers and buyers. Once some trust (hence interest) develops, prospect buyers opt-in or subscribe to receiving more information from vendors about their products or services. We have now moved into whats called the trust economy; where reputation, perception, what others say about you, your brand, your prouduct etc has much weight.
Along with this fragmented buying process comes an added layer of complexity in the marketing process.
In order to compete, B2B businesses will need to view the entire buyer experience and reinvent it. This will require new ways of thinking, new methods of reaching your target customers, new ways of having relevant conversations and a much deeper understanding of your buyer persona and what makes your buyer… well buy.
A new metric proposed:
In order to track progress in this “complexified” marketing/sales process, I propose a new metric, a new measure on the ROI of a marketing activity: influence.
Using influence as a metric, you get a more holistic appreciation of your customer’s actions. By measuring and tracking the influence your marketing activity has had on the buying process, you will suddenly find marketing messages turning into conversations and marketing investment dollars shifting from media buying to developing customer understanding and education instead. Your metrics to judge ROI of a marketing activity will move from tracking dollars generated from a particular marketing activity to tracking influence generated by that activity.
In order to measure influence, you can continue to measure standard industry metrics such as click-throughs, open rates, number of unique visits, inbound phone calls, mentions in the press and social media etc. You can develop your own system where each hit or each call gets a point for example. So one click-through = 1 point and one inbound phone call = 3 points (if thats what works for you). This will ensure that each type of action taken by a potential buyer has a recorded influence that you are tracking continually. (P.S. – this scoring system will likely be too much overhead for a small organization, but it is a good way to keep track of progress should you want to be very precise with your campaigns.)
To test out my theory, I talked to David Stott, VP Marketing at Covarity; a B2B high-tech company that sells to financial institutions. I asked David about how they do things around there and what processes they follow to make sure marketing delivers a sound return on activities they undertake.
He described having a standard annual budget process where sales goals are forecasted for the fiscal year and then working backwards to understand what and how many marketing activities they will need to conduct. “We’re trying to move to a model where marketing is not only measurable, but understand what is the optimal amount of marketing investment needed to generate the forecasted sales” said David.
They recently shifted from impression-based marketing to content marketing in order to really try to connect and engage with their prospects. They wanted to shorten the sales cycle and give as much upfront information as possible so their prospects could make an informed decision.
“With focused content and thought leadership, we found that sales teams were getting much better engagement earlier in the sales cycle.” The ROI on marketing activities that helped build authority and thought-leadership was proving to be much higher than all the other stuff they had done. Their sales teams were having much fewer, but far more productive and deeper conversations with customers. “We used to beg senior execs to be part of our events and webinars. Now they are calling us!”
Covarity used authority building techniques, resulting in more conversations, higher engagement and better conversion rates from leads to opportunities.
But increasing lead quality through active dialogue and engagement needs a long-term commitment. You cannot influence and build authority with one-off marketing campaigns i.e. marketing activities and the measurement of it needs to be continuous and not episodic.
Going back to our theory of using influence as a metric to measure the success of your marketing actives, you will see that it all starts making sense. For example, if you had a 1000 visits to a particular blog post and visits came from frequent readers, subscribers and some push through social media channels. Lets say that the cost of writing the blog post and the push/pull mechanisms was approximately $200.
Then your Cost per person influenced = cost/no. of hits = $200/1000 = 20 cents. Of all 1000 people influenced, say you got 1 Lead out of it, then your Cost per Lead is basically = $200.
But things don’t always work that way. You might have to touch the same 1000 people over 2-3 times before you get a single Lead out of it. This will change your Cost per Lead depending on what those activities are. In this case, your Cost per Lead might infact be = $600 or more.
Now, in order to move prospects from a Lead to Opportunity stage, you might need to employ a few additional nurture strategies along with sales calls such as webinars, round-table discussions, nurture email campaigns etc. Having a baseline on how many and what types of marketing/nurture activities you need to do, in order to facilitate each of these conversions will help create a more robust pipeline to meet your sales targets.
The trick to success using this methodology is in finding the most cost-effective combination of marketing activities that will influence your target customers to convert from a Contact to a Lead, from a Lead to an Opportunity and so on.
Measuring the influence generated from each marketing activity you undertake will enable you to continually fine-tune your activities and accelerate the sales cycle.
I hope this makes some sense to you. The idea is to eliminate the randomness from your marketing and business efforts and focus on integrating your plans and goals while making data-driven decisions. Using influence as a means to measure ROI empowers you to make the hard decisions… especially it you are honest and open-minded with your measurements.
As Ryan Caligiuri, VP Marketing at Imaginet and leading Globe and Mail columnist says, “Great marketers aren’t born, they’re created through measuring and testing. It’s one of the most important things marketers and entrepreneurs must do in order to have a successful marketing endeavor.”
Ryan, I agree with you wholeheartedly. Better metrics lead to more informed decisions.