Marketing ROI

Measuring the right things

Working out meaningful ROI figures from your marketing

Bar chart of pound coinsIf you want to know where best to allocate your marketing budget, or whether it makes sense to spend any more on marketing, you need to properly measure your  return on investment.

Measuring marketing results can get very complex, but for most businesses it’s best to keep it simple so you get clear answers to help make decisions. There are just a couple of basics that you need to understand before you get started:

  1. You will need to properly record your marketing activity and particularly customer responses. The same goes for sales enquiries. If your systems don’t tell you how each new customer is finding you, make it a policy that you will always ask.
  2. Be clear about the difference between short-term lead generation and slow-burn reputation-building. They may both fall within marketing, but with significantly different focus and structure, you need to measure them differently if you want to make sense of what’s working and what’s not.

Lead generation

Lead generation is where marketing begins for many smaller companies. That’s why it pays to look closely at how well different activities are working for you:

  • If your marketing comprises a few big events or activities, look at each in turn and list out the sales opportunities that were generated. Follow each one through to the eventual outcome, the revenue or margin that was generated.
  • If you have a lot of marketing activity going on, it may be easier to start with the revenue and track customers/projects back to your marketing activities. For a given customer, you may find several activities which helped attract and convert them. Don’t over-analyse; this isn’t an exact science.
  • Consider the quality. Basic revenue figures only tell you so much. Make sure you find out which marketing activities connected you to the best customers and which led to more time-consuming, low value leads.
  • Value repeat business. The credit for repeat business may go to customer service or sales, but you still need to know which marketing activities are generating those valuable, long-term customers in the first place.

Reputation and brand building

In business-to-business markets, brand is often misunderstood. It’s fairly pointless comparing a small business to someone like Intel or Apple. But in most industrial markets there are companies which buyers trust and products which engineers are willing to pay more for. Building that kind of brand is what you need to be investing in.

  • Set ambitious goals for recognition and trust, but keep them focused on narrow markets so your marketing investment won’t be spread too thin.
  • Consider whether you have the budget to build a brand amongst end customers or whether it would make more sense to measure the impact of your activities on the community of potential resellers or specifiers.
  • To measure people’s perceptions of your business and products, you can use traditional market research techniques and ask them directly. However it’s no use asking just a handful of people and assuming that they are representative of the whole market; you need enough responses to be statistically significant – a couple of dozen as a bare minimum.
  • If you aren’t able to research market perceptions directly, you may get a reasonable approximation by measuring intermediate results. For example, the coverage that you get in the trade press or how often your content is re-shared on social media could give an indication of how your visibility and credibility are growing over time.

Measuring marketing results is like many other areas of business: it’s often best to get started in a small way and then refine the approach to suit your management style and the decisions you need to make. If you would like to discuss this further, then please get in touch on 01905 317 318.

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