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Marketing Strategy

5 Ways to Measure, Analyze and Improve B2B Marketing ROI

Written By:

Stephanie Lanik;  Strategic Marketing Coordinator

As the number of digital channels available to marketers’ increases, so does the pressure to be more effective and efficient. In an environment ruled by data and technology, business owners and marketers struggle to quantify the link between expenditure and the bottom line. And when it comes to measuring and calculating the ROI of their marketing programs, the digital age has really only made things more complicated. This is especially true for B2B marketers focused on lead generation programs with long, complex sales cycles.

Gone are the days of identifying a single source of sale and collecting the information needed to determine marketing had success. Just think, the modern-day B2B marketer must compete with:

  • Multiple channels
  • Various customer touchpoints
  • Multiple decision-makers and influencers in the buying process
  • Challenges around positioning the brand as a thought leader
  • Building and nurturing relationships, rather than simply concentrating on direct sales
  • Different lengths of sales cycles and pipelines
  • The length and complexity of the customer journey
  • The varying traceability of sources

It’s safe to say that marketers today are under the microscope like never before. The pressure to prove their worth by showing a tangible ROI is more real than ever. So, how does a marketer faced with so many challenges, find ways to assess the value and impact their programs have on the business?

There are many ways to measure B2B marketing ROI. It’s not one-size-fits-all and not every effort will translate appropriately for your company.

Here are some of the most effective ways to measure, analyze, and improve B2B marketing ROI:

B2B Marketing ROI: 5 Components to Consider When Producing Measurable Results

1. Understand Marketing Objectives

Each marketer has different objectives that influence the kind of strategy they designed. Typically, we are allocating resources across multiple programs and channels to accomplish the following:
  • Brand awareness and market positioning.
  • Lead generation.
  • Lead nurture and sales enablement.
  • Target account acquisition (via account-based marketing).
  • Customer loyalty, engagement, and growth.

Each of these efforts will involve multiple touchpoints. All of which have varying levels of impact and influence throughout the entire customer journey and decision-making process. It’s essential to evaluate which element provides the most value to your organization.

2. Avoid Vanity Metrics

Keep away from metrics that distract your team from the business goal. When it comes to metrics and campaign tracking, one of the easiest mistakes you can make is focusing on “vanity metrics” (also known as performance metrics or KPIs), instead of the metrics that really matter. Vanity metrics are things like page views, the number of followers, or the number of downloads of your free report, etc.

While these are all essential when optimizing marketing performance, these types of metrics don’t actually add anything to your bottom line. Instead, turn your focus to engagement metrics that equate to ROI, such as:

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Customer Acquisition Cost (CAC)

CAC is an index that reveals the average cost of acquiring new customers. It’s also used to determine how much of an investment a company is making to attract customers on a monthly, quarterly, semi-annual, or annual basis. This is important because it affects the bottom line – a company’s revenue. The lower this cost to acquire customers, the higher the revenue.

CPA is similar to cost per lead (CPL), with one key difference: An acquisition is more than a lead—it’s a verified sale. While measuring leads is a valuable metric (even when they don’t all turn into sales), acquisitions are what turn your marketing efforts into actual dollars. Some companies put CPL under the same umbrella as CPA, since a lead is also an acquisition.

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Customer Lifetime Value (CLTV)

The lifetime value of a customer is one of the most important metrics for any business. It indicates the total revenue a company can reasonably expect from a single acquisition over its lifetime. Looking beyond the first purchase and seeing the long-term profit yields a more accurate ROI.

By measuring CLTV in relation to CAC, companies can see how long it takes to recoup the investment required to earn a new customer. Not just for your marketing costs, but for your sales costs as well.

ProTip: For a sustainable and profitable business, you’ll want to ensure your CAC is lower than your CLTV. Knowing how much you’re spending per customer is crucial. In other words, ensure dollars you’re bringing in are greater than the dollars that are going out.

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Churn Rate

Your churn rate is essentially your cancellation rate or the percentage of customers who stop purchasing your products or services or cease their relationship with your business. This metric is also critical when calculating your CTLV, and in determining whether or not your efforts are having a negative or positive effect on customer churn.

When left unchecked, your churn rate not only wastes your acquisition efforts, it also reduces revenues and narrows your profit margins.

Vanity Metrics vs. Engagement Metrics

[Engagement metrics like blog shares, having an engagement through chats having a material count of active users is better than having thousands of likes and views. Interaction between you and the customer will have a great impact on the organization.]
Measuring the right metrics will give you the right marketing data needed to accurately forecast results and measure the progress of each marketing activity against defined milestones. You’ll be able to optimize your marketing in real-time, accurately plan out your future (long-term) marketing strategies, and overall, frame, justify, grow, and defend all your marketing activities and budgets.

3. Identify Customer Journey & Touchpoints

Creating an impactful B2B customer journey comes down to knowing who your audience is, mapping out their touchpoints throughout every stage of the customer lifecycle, and delivering the right message at every stage.

According to Datameer’s Customer Analytics ebook, having a deeper understanding of the customer journey will arm you with the right analytics needed to generate valuable insights. Such as patterns that help you take informed steps to:

1.  Accelerate and increase customer acquisition while lowering associated costs

2.  Predict and prevent customer churn

3.  Strengthen customer relationships and improve customer lifetime value

4.  Increase revenue per customer

5.  Improve B2B marketing ROI — In fact, in the marketing area along, data-driven companies worldwide improve their marketing ROI by 15-20% (Source: McKinsey on Marketing and Sales).

The path to purchase in the B2B world is a complicated journey. It’s made up of multiple touchpoints ranging from the first brand awareness to the beginning of the negotiation. These are moments of contact during the path of the customer that helps to shape the decision-making process.
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Using Touchpoints to Shape the Path to Purchase

Touchpoints are interactions defined by specific channels, departments, and metrics. Accurate tracking of these touchpoints that occurred before the lead was acquired, to and through the closed deal—the lifetime of the customer—gives marketers the trusted insight they need to optimize their budgets. More importantly, it helps them really understand the value the marketing programs have on their bottom line.

However, it’s important to remember that every customer is different and engages with your business in their own unique way. You must have the framework in place to optimize the journey to capitalize on touchpoints that offer opportunities to grow revenue.

Truly understanding your customer’s journey, means more effective marketing and more successful sales.

4. Implement a Lead Scoring System

Lead scoring programs allow marketing teams to effectively measure the return on investment (ROI) of their efforts. Marketers can see which programs and channels are generating the highest quality leads in order to make more informed decisions in future initiatives. This enables them to focus solely on marketing to qualified leads and nurturing future customer advocacy—making the most of every dollar spent.

Implementing a lead scoring system helps you measure your marketing efforts. Ultimately, so you can convey the right message at the right time and create a relationship with those you’re targeting. There’s no more guesswork on how to turn prospects into MQLs and how to lower your customer acquisition cost (CAC).

All-in-all, it helps bridge the gap between your marketing and sales while providing tangible, bottom-line benefits to your company.

5. Collaboration Between Departments

We all know the benefits. It’s no surprise to us that companies who have teamed up their sales and marketing teams generate 208% more revenue for their company and are 67% better at closing deals (Source: Digital Marketing Institute). Alignment between departments leads to greater success.

However, this can only be accomplished if two-way communication between both teams exists. By collaborating together, businesses get a better idea of how their customers buy. More importantly, they can then follow along with them at every point in their buying process. Resulting in more closed deals and long-lasting, valuable relationships with your customers.

The Bottom Line is Proving B2B Marketing ROI

Every company is structured differently, and when it comes to measuring ROI for B2B marketing programs, you can’t compare apples to oranges. The very nature of measuring marketing programs is extremely challenging and the solutions to these hurdles range from quick fixes to complex resolutions. That’s why it’s important for any marketing team to experiment with its own metrics and test new approaches.
However, don’t be shy to start out small—there’s tremendous room for improvement in the B2B marketing community. And, even those who are doing it well had to start somewhere small at the beginning, right?

So, as you get started measuring and analyzing your marketing efforts, keep in mind that when proving for every marketing dollar that’s spent, builds something for the future of the company (both the short and long term). This will allow your business to make informed decisions. Mainly about marketing strategies and funding while strengthening your brand equity and customer relationships over time.

Good News!!!

We can help you prove just that. And, we have a solid track record to back it up—See for yourself!

Start improving your B2B marking ROI and visit www.techtonicsale.com or contact us at info@techtonicsales.com or simply click the button below to learn more!

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