Marketing ROI (ROMI) KPI Dashboard - Key Performance Indicators
Do you measure your marketing return on investment with ROI key performance indicators?
ROMI helps to control the marketing spend versus investment cost into marketing. With the proper marketing ROI you can also adjust your marketing budget to the most effective return on investment ratio for your marketing activities. Marketing Glossary Return on Marketing Investment.
The classic elevator encounter
When your CEO meets you - the Head of Marketing - in the elevator or on the way to the cafeteria: does he ask questions like:
“Hi Monica, on the top of your head: how many times do you repay your group’s budget?”
How about this for an answer:
“Hi Bob, almost 7 times. We generated more than 2’200 leads last year, resulting in 271 sales, delivering 19mio profit. Our budget was 2.9mio. I can send you my ROMI kpi dashboard and walk you through the numbers if you like.”
Do you have this answer ready?
Or will your CEO hear something like:
“Um, it’s not really that much straight forward Bob. For most of our activities we don’t really know whether a sale was triggered by a marketing hit or a sales call and our sales funnel doesn’t deliver very accurate figures in terms of qualified leads and conversion ratio.”
Will he accept that he spends a marketing budget into the blue?
Chances are that your CEO wants you to own not only the numbers but the leverage behind clear KPI measurements so you can adjust your marketing measures for maximum performance.
In this article you will find a ROMI (Return of Investment in Marketing) Key Performance Indicators (KPI) dashboard that establishes the clarity and confidence Monica has displayed in that first response to Bob above.
Marketing effectiveness accountability
Marketing has been exempt from stringent performance measurements for the longest time.
Partly because it was viewed as a “cost of doing business” function and many activities overlap with other commercial tasks. Partly because the Sales funnel did not pay attention to the level of detail that is available with today’s CRM systems and go-to-market initiatives.
With increasing cost control and competitive pressure however, c-level managers also feel the need to understand and continuously improve their investment dollars into marketing activities.
Since today’s customers own a larger portion of the sales process, marketing plays the key role to fill the inbox of the Sales department. With quality leads no less.
But how can the marketing head establish evidence as to how all the marketing communications and market research tasks perform?
On top, she will want to fine tune and adjust the budgets to not only increase the conversion rates but to focus on those programs that generate most quality leads per invested dollar.
Many marketers are at a loss when you ask them about the impact or effectiveness of their marketing budgets.
Closed Loop Marketing
Marketers need more sophisticated ways of measuring the effectiveness of their programs than simply counting website hits and email opens or present website heat maps at the annual sales conference. In order to truly understand the effectiveness of the entire marketing effort, the marketing department must be able to track everything that happened after the brand touched the customer prospect.
With closed loop marketing the entire chain of events that leads to a sale can be analyzed. This can be done on a specific marketing activity or even campaign level.
But to what extend does a marketing action influence a customers buying decision? In order to obtain this clarity, marketing must have visibility into where their leads end up in the sales funnel, and must be able to tie their marketing activities and campaigns to specific customers so they’ll know when a deal has been completed and how much marketing influenced that deal.
Moreover: what happens to the leads? Who qualifies them, how are they reported as closed deals?
This is where Marketing and Sales need to grow together by the hips and share a passion to own commercial performance measurements.
Was it Marketing or Sales? Impact Attribution.
With the increasing impact by marketing and improving technology to follow and measure marketing activities grows the eagerness to fully understand marketing's impact. But just to what extend can marketing be credited for a bottom line number?
For some campaigns and marketing activities it should be fairly easy to close the loop.
When market intelligence managers identify leads via a well designed prospecting, targeting process for example. After sifting through databases and systems they hand off leads to Business Development to further qualify them, the leads are eventually converted into revenue by Sales with all necessary numbers and reporting transparency in place.
Or when agencies or dealers consume certain marketing deliverables (with a cost attached) and come back with closed sales minus their commission or margin.
These sales can be attributed pretty much directly to the marketing efforts and their cost. Whereas other marketing tasks might be just one influential factor in a customers buying decision.
For instance a customer might have seen an ad in a technical magazine, responded to an email campaign and discussed with the sales representatives before a buying decision was formed. There is certainly no scientific way to attribute a waterproof percentage number to the marketing influence to this buying decision.
But how accurate do you have to be and how much effort should be spent to at least have a solid idea about the impact marketing exercises in the sales process?
Keeping a close eye on the customer via lost bid analysis, customer satisfaction surveys, customer relationship programs like Net Promoter Score with the built-in customer dialogue and the regular engagement via Sales activities, should provide ample opportunity to feel the pulse and come back with a rough understanding whether a certain customer attributes his buying decision primarily to the marketing activity or the direct sales process.
Why not agreeing with sales - at least for these types of mixed buying influences - on a attribution factor like: 50%? So, in the example above the customers decision to finally sign the contract goes back to 50% of convincing done by marketing measures. Or 10% for email campaigns as there is much more convincing required by technical sales before the sales is closed?
This is not to say that this would work across the entire marketing services portfolio nor does it have to.
Especially for activities that are really impossible to attribute to a direct commercially viable outcome or that doesn’t target the sales process at all like competitive intelligence reports that are used in the strategic planning process.
At the end of the day there will be plenty of measures available. Some rather hard, some softer in nature. But it all boils down to the eagerness and drive to use the sales funnel for transparency and performance improvements.
CEO Bob will understand that certain measures amount to a good guess based on customer dialogue and he will be happy that his commercial people have found another reason to show customers how much they care about their relationship.
Show me the money
The KPI dashboard presented in this article includes some of the mentioned “harder” measurements like ‘Prospecting’ and some softer ones like ‘Print’. Assuming that Sales questions customers once a year as to how much they feel to be influenced by emails, online content or printed technical documents, marketing can stand with confidence behind the cost per lead and conversion ratio calculations.
Notice the Sales rows ‘directly attributed’ versus ‘indirect attributed’. Not only does this include the agreed upon marketing impact ratio. It is also a good way to join-up with Sales and demonstrate a team spirit reported in an otherwise flat spreadsheet that might be disputed across departments.
Hence, establishing this kind of reporting sports the teams. What does too is the ROMI calculation based on the real bottom line. Sales understand that their negotiation power and success to keep margins healthy also has an impact on the reported marketing performance.
When a marketing department establishes this kind of visibility for itself and to management it will be able to easily argue about adjustments and investments in the various programs and campaigns.
And like in this example, a certain amount of “unproductive” cost (T&E, admin) can be controlled and adjusted to the need for improvements (Education and development costs).
Return on Marketing Investment (ROI)
Definition:
Return on marketing investment (ROMI) is a measure of the effectiveness of a marketing campaign. It is calculated by dividing the net profit from a campaign by the cost of the campaign. A positive ROI indicates that the campaign was successful, while a negative ROI indicates that the campaign was not successful.
Positive Impact on Businesses:
ROI can have a positive impact on businesses in a number of ways. First, it can help businesses to allocate their marketing budgets more effectively. By tracking ROI, businesses can see which campaigns are most effective and which campaigns are not. This information can then be used to focus marketing efforts on the most successful campaigns.
Second, ROI can help businesses to measure the effectiveness of their marketing strategies. By tracking ROI, businesses can see which marketing strategies are most effective and which strategies are not. This information can then be used to improve marketing strategies and achieve better results.
Relevant Professions and Professionals:
The concept of ROI is relevant to a number of professions and professionals. Marketing professionals, sales professionals, and financial professionals all need to understand ROI in order to make informed decisions about marketing campaigns.
Process and Application:
The process of calculating ROI can vary depending on the specific campaign. However, there are some general steps that can be followed. First, the cost of the campaign must be determined. This includes the cost of advertising, marketing materials, and other expenses. Second, the net profit from the campaign must be determined. This is the difference between the total revenue from the campaign and the total cost of the campaign. Finally, the ROI is calculated by dividing the net profit by the cost of the campaign.
Expert Advice:
There are a number of things that businesses can do to improve their ROI. First, they should set clear goals for their marketing campaigns. This will help them to track the effectiveness of their campaigns and measure their ROI. Second, they should track the results of their campaigns on a regular basis. This will help them to identify which campaigns are most effective and which campaigns need to be improved. Finally, they should use a variety of marketing channels to reach their target audience. This will help them to get the most out of their marketing budget.
Do's and Don'ts:
Dos:
Set clear goals for your marketing campaigns.
Track the results of your campaigns on a regular basis.
Use a variety of marketing channels to reach your target audience.
Invest in high-quality marketing materials.
Track your ROI and make adjustments as needed.
Don'ts:
Don't expect to see a high ROI overnight.
Don't be afraid to experiment with different marketing strategies.
Don't cut corners on your marketing materials.
Don't give up if you don't see results immediately.
Risks and Mitigation:
There are a number of risks associated with ROI, including:
The cost of the campaign may be underestimated.
The net profit from the campaign may be overestimated.
The wrong marketing channels may be used.
The wrong target audience may be targeted.
These risks can be mitigated by:
Carefully planning the campaign.
Tracking the results of the campaign on a regular basis.
Using a variety of marketing channels.
Targeting the right audience.
Real World Examples:
There are many real-world examples of businesses that have successfully used ROI to improve their marketing campaigns. For example, Amazon used ROI to track the effectiveness of its email marketing campaigns. By tracking ROI, Amazon was able to identify which email campaigns were most effective and which campaigns needed to be improved. As a result, Amazon's email marketing campaigns became more effective and generated more sales.
ROI is a valuable tool for businesses that want to measure the effectiveness of their marketing campaigns. By tracking ROI, businesses can see which campaigns are most effective and which campaigns need to be improved. This information can then be used to allocate marketing budgets more effectively, improve marketing strategies, and achieve better results.