Can you feel the heat? If so, you’re not alone.
CMOs are being held to higher standards each year to improve efficiency of spend, maximize ROI, and provide transparent impact to bottom-line sales revenue, CMO.com reports. And showing a positive return on investment isn’t just important for gaining buy-in from the rest of the C-Suite. It’s personal, too — in many cases, ROI is how a marketer’s job performance is evaluated.
And then there’s the age old question: how do you prove ROI? Especially when there are multiple channels, multiple touchpoints, and a million different ways customers can engage with your brand.
And the modern answer is far more complex than a last-touch attribution model. Here are 4 key steps to keep in mind when you’re proving ROI:
1. Don’t Treat ROI Reports as an Exercise in Justification
Often marketers are pulled into a trap: use ROI and data as a justification for job performance. It makes sense — if your goal is to impact bottom-line revenue and maximize the return on your investment, then your performance and your department is evaluated on the same metric. This causes marketing reports to become justification exercises: because we did X, we deserve Y in budget (or bonus, depending on how your company is structured).
But if you start with the wrong focus, you’ll get the wrong results.
Focus instead on truly evaluating the impact of your efforts. As you test, research, and develop a marketing strategy, you’ll always come across areas of improvement and areas where your strategy has clearly impacted sales. By looking at ROI as a measure of efficiency, you can tweak your strategy in the right direction.
2. Understand the True Value of each Strategy — And Don’t Measure Different Tactics with the Same Yardstick
We sometimes overlook the fact that each platform and tactic is unique — some tactics are better suited for brand awareness, others for increasing the sales, still others for increasing engagement. While trying to demonstrate ROI, it’s important to provide context for the value. Word-of-mouth marketing has a demonstrable ROI and lowers customer acquisition cost, whereas email marketing also has a high ROI — but may only minutely affect acquisition cost, if at all.
Know the difference between your strategies and apply measurement appropriately.
3. Look for Solutions that Integrate Reports
It’s hard (on a scale of 1 to to nearly impossible) to get an overall picture of your marketing’s impact if you have to dig through multiple systems to get the data. As the emphasis on proving ROI increases, so too does the need for integrated systems and one-click reports. If your goal is to show the positive impact of your marketing department and evaluate how well your tactics are working (see point number 1), then ease of reporting isn’t just “nice” — it’s a must.
4. Manage Expectations.
Don’t expect the other members of your company’s C-Suite to inherently know the value of each tactic and plan you execute. Clearly define value prior to execution and don’t be afraid of discussing where plans fall short. Growth is the goal, and by managing expectations, you can help your fellow C-suiters see that a 50%x ROI on this strategy is a win, and a 100% ROI on this strategy is less than impressive.
It All Comes Down to How You Approach It
Proving ROI, while once nebulous, is key to the marketer’s future success. Knowing the traps marketers often fall into in measuring ROI and taking steps to successfully navigate those issues is a vital part of any CMOs job.