Virtually every C-Level Manager wants to see a return on investment (ROI). They want to be able to quantify the benefits of a given business decision so that they how to invest resources into future endeavors. What will happen to the company’s revenue and market share if a new marketing technology is purchased? What impact will that purchase have on the company's bottom line? Unfortunately, many Chief Marketing Officers (CMOs) have a hard time answering this question, but it doesn’t need to be this way.
The challenge facing CMOs is twofold; Define marketing ROI and keep the company's marketing technology (martech) stack aligned with the speed of today's business. In fact, an argument can easily be made that today’s CMOs require a larger budget for technology upgrades and purchases than a company’s IT department. Justifying that purchase is essential. Understanding how is equally as important.
Your company needs technologies that help you increase customer engagement with a mobile customer base. That involves defining the technology you currently have, the technology you need to purchase, the costs involved in the purchase, and the expected return. The more accurate your analysis, the more likely you’ll secure that all important budget increase. So, what must you do to ensure you’re not only tracking ROI, but that you’re aligning your inbound marketing strategy with your company’s goals and objectives?
1. Define Market Goals and Objectives
Your company’s goals and objectives must be clearly defined. If the goal is to increase revenue and market share, then define how you’ll link that growth to the new technology purchase or to the additional digital marketing strategies you'll employ. Break it down. Simplify it. Will you measure that growth by an increase in conversions? Will you measure it by an increase in sales? Will you measure that growth by increased wallet share with existing customers? Or, will you focus on customer retention by tracking repeat orders?
Aligning company-wide goals and objectives with your inbound marketing strategy is the all-important first step. Buy-in from all parties is the next. Your entire team must come to an agreement about the goals and objectives you’re all trying to attain. Tying in your marketing efforts and any additional investments becomes a much simpler process once everyone agrees on the objectives.
2. Define Metrics, Benchmarks and Key Performance Indicators
Define a baseline for the unit of measure you’ll be tracking. You can define key performance indicators (KPIs) that track customer retention, customer acquisition, and sales. You can also break that down even further with KPIs that track the increase in lead generation and subsequent increase in conversion rates. Use your website's metrics and track the improved performance of individual landing pages. Once you’ve established your KPIs and benchmark review periods, tracking performance is ultimately about outlining whether you’re on track to meet your company’s goals or whether you need to alter course.
3. Align Existing Technology Resources
What existing technologies and digital marketing platforms does your company have right now that will play a role in attaining your goals? This information is critical to defining the additional resources and technologies you’ll need to purchase in order to make your inbound marketing strategy work. Your customer relationship management (CRM) software must be aligned with the strategies you employ. How your sales and customer service teams go about moving your leads through your funnel must be part of your overall approach to measuring your performance.
Alignment is essential. Outlining how a lead was generated, and how that lead became a sale is critical to justifying your marketing efforts. Make sure your CRM is aligned with your company’s goals, your marketing KPI and your benchmark reviews. Most importantly, make sure that the investments you make in new technology can be linked and aligned with existing platforms. That means having a technology that can easily be integrated with your CRM or other existing marketing tools.
4. Define Gap in Technology and Identify Tools to Buy
Here is where you define the gap in your marketing technology and outline what you need, how it will help you attain your company’s goals, how you will track your performance, and how you will define your ROI after the purchase. Your inbound marketing strategy may need to increase leads. You may decide that leads aren’t the problem, but conversions are. Sometimes the problem isn’t lead generation or conversions but the inability to close sales. Your company may have a problem keeping your customers engaged throughout their journey. That inability to properly guide leads through your funnel can be costly.
Identify the roadblock, why your investment in a new technology is needed, and how it will remove the problem. There are multiple platforms and software solutions to choose from. Unfortunately, many companies are easily overwhelmed with the numerous options, especially given how quickly technology changes. A simple way around this is to ensure that the investment you make is intrinsically linked to the attainment of your company’s goals. How will this purchase help you reach those goals and how will you track the performance of your new tool?
5. Measure Performance
You must define how you’ll measure the performance of your new marketing tool long before you make the purchase. If you’ve properly identified the shortcoming in your inbound marketing strategy, and chose a technology that will help you remove that shortcoming, then tracking your performance is simply a matter of showing how that technology is solving your problem.
Come up with a series of KPIs and identify periods for benchmark reviews. Tie in how that technology has impacted your company’s revenue. How has this purchase helped marketing? How has it improved customer communication and engagement? Most importantly, how has this purchase increased revenue? Answering these questions helps to justify the purchase and position you for a marketing budget increase in the future.
6. Tracking ROI
If you’ve properly identified your KPIs and tied them to your company’s goals and objectives, then tracking ROI should be relatively straightforward. Just be sure to apply a dollar value to your analysis. Financial metrics are critical. Show how the purchase impacted the company’s bottom line. An ROI analysis on a website redesign could be measured by increased traffic, higher conversions and an increase in customer acquisition.
Tracking these variables through your website’s analytics will help you justify your marketing investment. Other solutions like marketing automation can also be tracked. You may decide to invest in a new email marketing software or a social media optimization software. Defining the ROI on these investments would involve tracking how leads were generated and how they lead to an increase in sales.
Approximately 85% of today's CMO's use social media in their inbound marketing strategy but only 14% link financial metrics to how successful they are at leveraging the platform. Obviously, this makes justifying a technology upgrade for social media next to impossible. Don't be one of these statistics. Always define ROI and use financial metrics that speak to the dollar value of a given marketing decision.
Do you need help justifying a technology upgrade for your inbound marketing strategy? Do you need a refresher on how to define marketing ROI? Connect with us. Connection Model can provide an assessment to help you determine the best course of action.
Written By: Doug Milnor
