Are Your Marketing Dollars Paying Off?

By Brien O’Brien

We’ve heard from many advertisers about how important Return on Investment for your marketing endeavors is and yet I’ve received feedback from a few advertisers that the equation was too complicated to put to regular use in their organizations.  How can a marketer keep track easily of how well each of their marketing campaigns are paying off for them in revenue?

I was talking to a client recently who has developed a system for tracking their marketing money spent by campaign against revenue and I was amazed at how simple it really could be.  Of course, not all marketing campaigns have a goal of direct revenue such as branding campaigns, new product announcements and customer service messages.  But, for the most part, marketers are charged with creating campaigns that will give the sales team real leads that will eventually become customers.

In order to track your return on investment you must first start with developing a procedure within your own Customer Relationship Management (CRM) system that will allow you to follow a lead all the way through the process from the time the lead is first obtained through becoming a customer.  The next step would be to determine the longest lead time it might take for the potential customer to actually buy product, in many cases in our industry that could be two or more years.  Finally, you must assign a dollar amount for each marketing campaign or endeavor so you can eventually analyze the amount of revenue that was received from leads for each individual campaign.

As an example you exhibit at a tradeshow which has a total cost of $60,000 including booth, travel, promotional items and such.  While at the show you are generating leads of potential customers who come by the booth to learn more about your products.  Each of those leads should be entered in to your CRM coded for that specific show.  Over the course of your pre-determined lead time you are following this lead through your system – calls made, proposals sent, direct mail efforts and meetings.  Once that prospective customer buys your product, that revenue would be logged against the $60,000 expense of the tradeshow.  At the end of your pre-determined lead time (say two years), if the prospect has not made a purchase, then they would be dropped from the ROI calculation from that campaign.   An important factor here is to make sure the sales department is on board with the program and updates the information in the CRM so that it can be tracked.

The same type of system can be used for all of your campaigns from banner ads that click to a dedicated landing page on your site, to print advertisements that have a dedicated URL for that specific publication, to Lead Gen programs like whitepapers and webinars.  While inside sales and website visits have often been tracked this simple system of calculating your return on marketing investment for all of your campaigns can help you see what programs are working and which ones are not.  It also gives you great data to justify the money that you do spend in marketing and possibly make a good argument for an increase in the marketing budget.

While you may work for a large company that has a sophisticated process for tracking ROI on marketing, most of my clients struggle with justifying the money that they spend as they are not able to correlate campaigns to actual sales.  This simple program would be a step in the right direction for even the smallest of companies and can help in shaping future marketing campaigns and expenditures by illustrating which ones really pay off.