Prove your Return on Marketing Investment - A Process to Understand the Value of Marketing Activity
A guest article from Jade Haase of AeroProfessional. Jade shares her robust process which helps prove the ROMI of her marketing activity and shed some light on the value of marketing in a recruitment agency.
If I may be so bold – Prove your ROMI!
If you’re not doing this already, you can start today. Start simple and build it up. Don’t be afraid of diving into the figures and shining a spotlight on your department’s performance. If you’re working hard and smart, your figures will reflect that.
We need to stop being scared of analysis and embrace it. If the results aren’t great, understand why, learn from it and don’t expect an increase in revenue otherwise. If the results are great, shout about it!
An overview: the mindset of proving ROMI.
One of the biggest challenges any Marketer has to face is ‘how’ to prove ROMI. Meanwhile, a problem for stakeholders is understanding ‘what’ ROI Marketing is delivering. First off both sides of the table need to equally understand 3 key factors:
- There is a % of your Marketing budget that supports brand awareness, so trying to calculate the pound for pound on everything isn’t going to happen. A prospect may have seen you at an event 12-months ago, but only now do they have a need for your solutions and decide to phone in. It’s unlikely that your prospect will detail out their journey of engagement with you, so the effect of the event goes unnoticed. Ultimately, the term ‘brand awareness’ seems to have a bad name, but if your Marketing team are attributing and executing your strategies for brand awareness correctly, they will be indirectly supporting all your lead gen initiatives.
- Stakeholders must truly understand what ‘value’ Marketing is delivering, and by ‘value’ they ultimately mean £££. This isn’t a bad thing; the more you can prove your ROI, the more likely you are to increase your yearly budgets and justify additional spend if needed.
- Marketing can’t prove ROI if the line of internal communications is poor. It’s imperative for sales and marketing to have an open dialogue to discuss and determine lead attribution correctly. The more feedback the sales team can provide, the more likely they are to see an increased investment towards those activities, which eventually provides them with more leads equalling more commission! It’s a no brainer.
When I started with my organisation, marketing reporting was absent and granular reporting of ROMI was unheard of. As an analytical marketer I quite like pulling through the numbers and drawing out the stats, so I saw it as a welcomed challenge to try and develop a process which proves ROMI and attributes a hot lead to not just ‘Marketing’ or ‘Sales’ but to an exact activity, ie., ‘Client Newsletter, Article 3, sent on 14.02.19’.
Don’t get me wrong, this didn’t happen overnight. Getting to this point took a lot of work. I had to trial different processes and gain constant feedback from the stakeholders to understand what was providing value and what wasn’t. Finding a process that works for all parties is the hardest part. Don’t panic. It’s a learning curve and every company works differently - so build a process that is right for your business.
Our process and how it works for us…
The process for our business manifests itself as a weekly catch-up and a comprehensive spreadsheet that I’ve titled, 'Master Lead Gen Record’. Sound simple? Great, it is.
The below will outline the process I’ve created and how you could use it for your business. I’ve split my explanation into key parts and used fictional data to best show you what this could look like for your business. To keep it simple I’ve also removed some elements I track to keep it focused on the core measurements. Remember, every business and thus the processes that come with it are different, so use what works for you.
Let’s discuss the format
The Lead Gen Record spreadsheet is split across two tabs;
Tab1: Yearly Record
Tab2: Marketing Funnel
Tab 1 is an evergreen record of all your qualified leads (note the word qualified - we will come back to this). This is your primary tab for weekly catch-ups with your Sales/Business Development team.
Tab 2 is a funnel to deliver the all-important numbers; % Leads Attributed to Marketing, Prospective Revenue, Actual Revenue and ROMI.
So, qualified leads? Whilst we would love every lead to be from a qualified decision maker who is ready to commit, the reality is that this is not the case. Every company will have its own processes for how they qualify a lead. You will need to agree on what these qualification factors are for a marketing lead and a sales lead.
In Tab 1, you will essentially be creating a record of both sales and marketing leads, grouping them into each month. I use the below tabs for data collection, but you should consider if these are or value to you, or if others would provide more value to your business. For example, if collecting the ‘Client Contact’ wouldn’t provide you with benefit, then don’t include it. You want to keep this process as minimal as possible to get maximum buy-in.
First thing on a Friday morning (this being the least manic time for our consultants) have a quick catch-up with each consultant/account manager to; firstly, go through existing leads and update their status, such as the proposal to live. Secondly, add new ‘qualified’ leads you have agreed on. This isn’t a formal meeting, meet at a stand-up desk or catch-up area. This is also a great opportunity to understand how the leads are progressing and if there is anything else that either team can do to support conversion.
Tab 2 - as an analytical Marketer, this is your page to pull together the numbers and prove your ROMI! Over time my spreadsheet has expanded to measure quite a lot. For this article, I’m only going to pull out some of the key elements I use and display them in a simplified format. If you’d like a more detailed understanding feel free to contact me and I’d be happy to help.
What are you delivering? - % of leads attributed to Marketing
Using Tab 1, add up all of your leads and place the number into Row 1. Then add up those with a ‘Marketing Origin’ and fill out Row 2. Then simply apply a % formula in Row 3.
After this step, you will only be looking at Marketing leads, as this is a Marketing exercise to show your ROMI. Your sales team will likely do this in their team too, albeit via a different process.
Prospective Delivery? – Proposal Value
As a marketer, we work at the top of the funnel, so understanding prospective revenue is just as important as actual revenue. If your marketing lead has developed into a prospect i.e. open line of communication with an account manager and has received a proposal for work, there isn’t much more you can do to get it across the line. You have delivered the prospect down the funnel to the sales team where they must close the lead. Other than providing support to the sales team, this is no longer in your hands.
It’s important to measure delivered activities that are reflective of your time, money and resource spent.
On Tab 1, if a lead is attributed to Marketing you should ask for the margin expected from the proposal sent. (Note: If like me your business is international you will need to include additional rows on tab 2 to allow for multiple currencies). Take the Proposal value and insert this into tab 2. I also provide a quick-view breakdown of clients who make up the values. I find it useful, but it’s completely up to you. I’ve provided some arbitrary figures to show how this would look, this would appear under image 1:
To provide an additional layer of analysis you may want to analyse converted proposals. If this is something you’d like to track, I’ve provided the image below of how this could look, using different currencies and figures:
How much are you delivering? – Bottom Line Revenue
Through your regular catch-ups you will be following the process of each Marketing lead from proposal value, vacancy value and hopefully ‘Marketing Revenue’.
Ultimately you will now have one row which totals revenue. Again, you may want a breakdown underneath of each fee per client – I find this useful, in case there are questions around the breakdown. Equally, there is likely to be a delay between proposal and revenue, so this is also why I find a quick view breakdown useful.
Finally, you will need to look at your budget to calculate your ROMI. Depending on your business you may wish to provide this information monthly, quarterly and/or yearly. As always, use what works best for you and your business. Does reporting monthly provide you with additional value over quarterly reporting? Perhaps not, so don’t do it.
What else does the data show?
I’ll repeat my introduction ‘Don’t be afraid of diving into the figures and shining a spotlight. If you’re working hard and smart, your figures will reflect that’. Here are the other benefits of building this record.
- Key activities that drive ROMI – This is a big one! From this record, I look at the activities listed under ‘activity type’ to understand what is providing the best number of quality From your budget, look at how much that singular activity is costing you. Is it proving good ROMI? If not, why? Do you need to ditch it, start a/b testing or go back to the drawing board? You may be surprised. Activities with little investment could be giving you the best results, so maybe you should consider allocating additional resource and funds.
- A yearly ever-green record of leads to look at trends, seasonal peaks and even changes to a company’s decision makers.
- Identify missed opportunities: use your data to not just analyse the present but also the past. Look over your record to identify if/where you could have improved. Is there an opportunity to re-visit these leads?
- Holes in your process: what elements of your process do you need to work on? Having such granularity in your spreadsheet will only highlight areas of your business that need a review first. Is it conversion, lead generation etc.? This insight may be invaluable to your stakeholder’s strategies and you’re also demonstrating strategic ability to look at more than just Marketing.
Barriers – Accept them, you work in marketing.
You're going to have barriers, but making this process flexible will help you get buy-in from all those involved. Constant improvements to the process and incorporating feedback is key. If you set your process in stone your teams are likely to be more resistant.
Explain the benefits to your sales team. Analysis to understand the best performing activities and thus re-investing in those activities creates more leads for your sales team which in turn leads to more money. Be sure to explain this to get quality feedback from your team.