by: Stephanie Lanik
As the number of digital channels available to marketers’ increases, so does the pressure to be more effective and more 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. As well as collecting the information needed to determine whether your marketing had worked.
Just think, the modern-day B2B marketer must compete with:
- Multiple channels
- Multiple 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. And 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:
1. Understand Marketing Objectives
- 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 that have varying levels of impact and influence throughout the entire customer journey. As well as the decision-making process. It’s essential to evaluate which element provides the most value to your organization.
2. Avoid Vanity Metrics
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.
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.
Customer Churn Rate
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
3. Identify Any Sales Bottlenecks
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:
2. Predict and prevent customer churn
3. Strengthen customer relationships and improve customer lifetime value
4. Increase revenue per customer
5. Improve 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).
Using Touchpoints to Shape the Path to Purchase
However, it’s important to remember that every customer is different and engages with your business in their own unique way, it’s vital that you have the framework in place to optimize the journey to capitalize on touchpoints that offer opportunities to grow revenue.
4. Focus On Quality, Not Quantity
Implementing a lead scoring system helps you measure your marketing efforts 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. Focus On Quality, Not Quantity
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 and 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.
So, as you get started measuring and analyzing your marketing efforts, keep in mind that when proving for every marketing dollar that’s spent, it’s building something for the future of the company (both the short and long term). This will allow your business to make informed decisions about marketing strategies and funding while strengthening your brand equity and customer relationships over time.
When it comes to nurturing leads and increasing conversions, nothing is more important than a strong sales-marketing alignment, or as we call it, Smarketing
Here’s a handful of lead nurturing strategies designed to help you manage your leads and improve your lead conversion rate. FREE checklist included…
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