If you google “marketing ROI best practices” you are likely to get a lot of content on attribution methods. This blog post is not about attribution methods. It is about nailing down your core business objectives, and making sure your data collection is organized in a way that serves to measure your performance against those core objectives.
Accomplishing this, even if the main KPI you are using to measure performance is not actually “ROI” as your business and finance analysts define it, you’ll still be able to clearly demonstrate why marketing matters.
As an example, we’re going to use a case study from one of our partners, Eagle Point Partners, and LearnSignal, an online learning company. If you saw our webinar with Forrester Research and Eagle Point in December, you’ll recognize the material. If you didn’t, click here to watch it on demand.
The first step to measuring and improving marketing ROI is to clearly articulate your marketing objectives in terms of how marketing drives business growth. For example, the LearnSignal marketing team drives customer acquisition to increase monthly recurring revenue (MRR), and optimizes to reduce time to conversion for more efficient return on ad spend.
You may have noticed that not once did we actually use the term “ROI” in that statement. However, the KPIs we chose are immediately measurable and directly relevant to tactical marketing efforts. AND they both show impact on revenue and spending, making them directly relevant to the overall ROI of the business.
The next step is to determine what data is needed to measure for these KPIs, and make sure it is being collected and managed well. This will likely include campaign data from multiple channels, user/customer data, as well as transaction data. To measure marketing’s impact on customer acquisition, Eagle Point created a data architecture for LearnSignal that automatically generated unique user tokens that could be used to connect traffic data with transaction data. They also automated the calculation and reporting of cost-per-acquisition from each channel, so LearnSignal could quickly optimize their campaign spending.
Eagle Point’s solution for LearnSignal was really quite simple when it came down to it, but it produced phenomenal business results. Within six months, total MRR increased six-fold, customer acquisition cost decreased by 53%, and ROI increased by 116%. Additionally, by using the data to inform adjustments to creative decisions, LearnSignal was able to decrease the average time to conversion for new customers by 36% within five months.
In the rush to become increasingly data-driven, marketing teams have too often found themselves with more data than they know what to do with, and even performing analysis just for analytics’ sake. Before diving off the deep end trying to piece together marketing ROI using any KPIs you can possibly mash together, take the steps to put together an automatic data management and analytics system based on clearly defined business objectives. As a result, you’ll ensure that your marketing team is constantly equipped with relevant and actionable information that they can use to improve ROI.
Read more on marketing ROI: