What is the ROI of your marketing program? How much should you spend on one channel vs. another?
Unless you are the CMO, chances are that your answers only look at a component of the entire marketing mix. Whether your organization is setup by function (email, web, direct, tele) or segmented by product or solution, only a total view of all marketing touch points will provide an answer.
This results in answers to the ROI question that may be incomplete. And are more than likely completely misleading your marketing mix decisions.
I recently spoke to a marketer who reported a “400% return on her marketing program.” But when I asked her how much of the other marketing activities at her company had touched those same converted prospects, she had no idea. She was getting all the credit because her program was the last one to touch the customer before they converted into closed business.
The “Last Click” Problem
The classic marketing funnel looks at leads as the progression of a person from being identified as a prospect through revenue close. Even putting that into customer terms, it looks at the progression from a person’s unidentified pain to defined business challenge to solution identification, consideration and selection.
But this is incomplete for a number of reasons:
- There is almost always more than one person involved in B2B purchase decisions
- Many factors affect the buyer journey
- Influencers and decision makers will often be in different buying stages at different times and may not always be moving down through the funnel in linear fashion
So just because someone at a prospect company clicks on your paid search campaign and then turns into a paying customer, does not necessarily allow you to “take credit” for what is very likely dozens of touch points across multiple people at many different points in time. This is called the “last click” problem of Marketing Attribution. In simpler terms, I like to call this the “who gets credit” problem.
In my B2B Marketing predictions for 2011, I said that this would be one issue that finally made it onto the radar screen for marketing executives.
Boy, was I wrong! In multiple searches on Google, I found nothing recent or very helpful regarding this topic on the first page. Maybe marketers don’t have the tools, resources or energy to tackle this problem. Is assigning all value to the ” last click” good enough?
The Answer: Marketing Attribution Modeling
Marketing Attribution Modeling could be defined as the science of determining the value of each customer touch point leading to a sale as opposed to just the last one.
There is a way to do this without hiring an expensive consultant or using an advanced analytics program, although I would suggest doing both (full disclosure: I do work for a software company!)
But it starts with the realization that this is important to do, that this analysis is just an extension of trying to understand what works and should help determine how much you should spend in each element of the marketing mix. You also should realize going in that someone will not be happy with the results. Someone is going to disagree with how you assign “credit” or value for creating revenue.
If that doesn’t scare you, the math that follows below might. So consider not reading any further. Think about how your company assigns credit for marketing return. Or simply blow this off as crazy “change-agent” talk. Either way, I’d love your comments below.
How To Attribute Marketing Value: “Pipeline Influence”
This isn’t perfect, easy or for the math-challenged but it can provide a better view into the appropriate value of your marketing contribution by campaign. This approach requires contact details for each marketing touchpoint, so website visits that do not gain registration, social interactions, ad impressions – none of these will be counted unless they gathered registration.
Step 1: Start by looking at only those companies that were touched by marketing activities and turned into customers. Your time frame should be at least 3 or 6 months greater than your typical sales cycle. The longer the time frame the better.
Step 2: Look at all the contacts and all the marketing touch points of those customers.
Step 3: Identify the revenue or pipeline value of those customers. There are different reasons to look at revenue vs. pipeline. Revenue will allow you to asses those programs that drove only revenue. Pipeline will produce a larger pool of contacts and will look more generally at marketing effectiveness.
Step 4: assign a relatively higher percentage value to each touch based on the proximity to the last touch.Then apply that to the total for each contact touch point over the sum of all contacts and touch points. So if there are 3 touch points, you might assign the first 10%, the second 30% and the last 60%. Obviously, there can be many factors to consider.
Step 5: add all the values within each campaign to get an average score.
Ok, so maybe you should ask someone who has done this before to help you. Having used this kind of data to make marketing mix decisions, you quickly see that the common “last touch” tactics (tele, web visits, webcasts) still get most of the credit. But those typically seen as a first touch will look much better than before (display, social, email).
These are my thoughts but what do you think? Let me know in the comments below?