Tech companies spend around 10% of their overall budgets on marketing*, but do businesses always know the true return on their investment? In recent blog I read that just 6% of B2B leaders say that they frequently calculate ROI, while 17% say they never do. So why is this? The ability to report on campaign outcomes increases visibility and allows real improvements to the effectiveness of marketing spend. The first hurdle is selecting the right metrics, and the second, putting the processes in place to ensure access to the data required.
When metrics go wrong
Concentrating on quantity not quality For example, your campaign may have generated a long list of leads to pass to the sales team, but what percentage is actionable? What is the conversion rate per campaign? Per channel? What is the contribution of those sales to profit?
Focus on activity not results Measuring the number of people through the door at an event, the number of emails sent out or cold calls made in a certain campaign demonstrates volume of activity but this is merely a measure of output rather than return.
Measuring what is easy It is tempting to measure what is easy, but the data that is most accessible to us may not be the most revealing.
Vanity measures These are the measures that make it look as though your marketing is working. It may be tempting for those responsible for the marketing activities to make them look more effective by cherry picking certain figures.
Choosing the right metrics
Harness technology to help you. Google Analytics has an impressive range of metrics through which to measure web-based activity. On-line marketing automation services such as MailChimp can also provide valuable analytics. And, most importantly, utilise your core business data to reveal the aggregate impact of your marketing activities on company revenue.
- Lead generation vs target
- Cycle time
- Pipeline contribution
- Average selling price
Marketing programme performance metrics
- Conversion rate vs trend or benchmark
- Response rate/lift over control group
- Investment to acquire a customer
- Retention rates
- Products per customer
- Marginal cost to serve
A useful rule of thumb is to choose no more than 5 metrics. Make sure you measure for every campaign and for every channel. Measuring and reporting over time will help to capture trends.
Using HarmonyPSA you can produce the revenue metrics described in this post without the need for complex spreadsheets. Leads can be linked to the specific campaign activities through which they were generated. As those leads convert to opportunities, and on to customers, the attributed customer data will allow analysis and reporting on key revenue, customer and marketing performance metrics. This depth of data is the key advantage of running one integrated enterprise solution rather than a stand-alone CRM system.
HarmonyPSA has the most advanced cost and revenue attribution engine in the market today. Powerful customer filters and pivot functionality brings unparalleled multi-currency analytic capability.
Contact us is you would like to find out more about cloud-based business automation software. We’d be happy to give you a free demo specifically designed to show how HarmonyPSA could work for you.
*CMO survey 2011
About the Author: Harmony Business Systems Ltd (HBS) is the company behind HarmonyPSA, the most complete cloud PSA software on the market. Developed with functionality to cater for even the most complex needs of MSPs, VARs, ISVs and Professional Services organisations, HarmonyPSA truly is the next generation of PSA systems. HBS is an independent company based in the UK. Follow HarmonyPSA on Twitter or LinkedIn