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Measuring and Managing Marketing ROI: An interview with Jim Lenskold

This is one of a series of occasional interviews with top practitioners on topics of interest to B2B lead generation, marketing and new business development professionals.

Jim LenskoldMy guest today is Jim Lenskold, President, Lenskold Group, a consulting firm specializing in measuring and managing marketing ROI and author of the award-winning book ‘Marketing ROI’.

Jim’s company has published several research studies covering marketing metrics and ROI. One of the studies surveyed B2B marketers concerning Lead Generation Measurements & ROI. It delivers some interesting findings on the most effective tactics and opportunities for lead nurturing. The full report is available for download at www.lenskold.com/LeadGenROI.

Jim, It seems to me that in today’s accountable business world, marketers must track and measure the results of their programs. Am I right?

Yes, Mac – you’re right about the increased need to track and measure marketing results. But it’s even more important for Marketing to demonstrate the ability to improve performance and profitability. Marketing earns credibility when it leverages measurement insights to improve targeting, contact strategy, marketing mix integration, and offers.

Also keep in mind that running ROI scenarios to show the expected financial contribution from a campaign investment – even without measurements – demonstrates a level of accountability.

I’ve heard B2B marketers say things like, “I don’t control the sales process, so why should I be held responsible for the sales results of my marketing programs?” Jim, how would you answer that statement?

We’re all hired as professionals to deliver business results. If Sales can’t convert leads from Marketing, regardless of who’s responsible, why should the company invest in lead generation marketing programs?

Measurements and performance analysis must drive good business decisions, helping to diagnose problem areas that can be addressed. In some cases, these problem areas can be addressed strategically, such as by improving lead quality. In other situations, the problems may be operational or cultural, and are resolved only when marketing and sales align to address issues like sales capacity or compensation.

There are many challenges to measuring the contribution of B2B lead generation marketing. What are some of the basic steps to get started with measurements?

A good starting point, in terms of big impact, is to better assess lead quality as determined by the projected sales conversion rate and the projected customer value. Projected values allow quick evaluation and decisions regardless of long sales cycles and customer revenues coming in over time.

Note: Jim delivered a webinar on lead quality which is available on demand at ‘How To Increase the Quality of Your Leads’

More advanced and highly valuable measurements are those that determine the contribution of specific tactics within a complex multi-touch marketing environment. Measurements using modeling and carefully designed market testing can identify the contribution of tactics beyond either first touch or last touch attribution and therefore guide decisions on the marketing mix.

Jim, how do you define ROI as it applies to marketing? Does it include savings or improvements, or is it purely a financial calculation of cost vs. sales revenue?

Marketing ROI should be used to guide marketing investments toward the most profitable returns. The incremental investment is assessed against the incremental returns to the company, which are driven by sales, revenue and margins. When the investment results in a reduced cost to the business, such as marketing to drive customer service online instead of through inbound calls, those savings can be considered part of the return. In order to maintain integrity, it’s important that ROI be calculated accurately and that calculations are consistent with the way that Finance runs them.

What role does marketing and/or CRM automation play in supporting measurements and ROI?

Marketing automation provides a significant benefit in terms of capturing critical data for measurements, analysis, and ROI. When linked to a CRM or sales automation system, additional tracking of lead progression and conversions provides a better measure of marketing contribution. Marketing automation typically includes a base level of campaign results tracking and may also include functionality to create test and control groups.

Jim, thanks for taking the time to share your thoughts on measuring and managing Marketing ROI.

Readers, what are your thoughts on the subject?

Please add your comments by clicking on the word “comments” in the line below the Share button.

Comments

Question for Jim and Mac: almost all the marketing automation (MA) vendors are referring to themselves by a new term: Revenue Performance Management (RFM). They say that MA is not inclusive of what their platform or software category is all about … that full dollar accountability has to start with marketing but expand forward through the entire marketing-sales process. What are your opinions of this?

 

I think the marketing automation folks at Marketo, who appear to be the first to use the term, believe “revenue performance management” is a better name for marketing-driven demand generation or lead generation as it implies a benefit, not just features. Marketing automation sounds like a feature. Revenue performance management sounds like a benefit. – Mac

 

I’ve recently been in a debate as to what vendors fall into the category of marketing automation. To me, it is a generic term that can include automating any portion of the marketing process and is therefore not very descriptive. But I know others that refer to the category as vendors who manage a good portion of the marketing process.

I’m very pleased about the term Revenue Performance Management. It focuses marketing on managing the outcome more than the process. Tools that help manage revenue performance are needed to migrate marketers away from managing tactical implementation or managing outcomes such as lead quantity that may not convert to sales and revenue.

There are two areas that still need further development. First is better insights into profitability to get to ROI since revenue does not indicate if you are generating more money than you are spending. The second is to move from reporting incremental revenue to getting better measurements that guide improvements.

Overall, marketing is progressing in the right direction.

 

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