CMO’s ProForma – The Silver Bullet for Marketing Return on Investment
The ability to demonstrate marketing's return on investment is at the top of every CMO's plan for 2013. The ROI picture has been elusive as marketers struggle to quantify results. Simple ROI calculations based on lead source have muddied the waters. These one dimensional views over emphasize the value of the clicked action, and under emphasize comprehensive efforts to drive the action.
A more robust framework for the ROMI (Return on Marketing Investment) calculation is required at the campaign level to provide a reliable picture of Lead Generation efforts. The Integrated ProForma campaign tool provides clarity to establish a comprehensive ROI.
This post provides CMO’s with strategic input to guide your team in proving a return. Click here to receive a copy of the Integrated ProForma Excel template.
Biggest Mistake in Marketing ROI - Mining for Gold
You are in trouble when you have marketing managers mining new customer lists for gold to show an ROI. This is the practice of looking at closed deals and then matching the wins up with marketing campaign activity and attributing marketing contribution to the win. It's a calculation that doesn't inspire confidence for the CEO or CFO.
The weakness is the sweeping assumption involved. No one knows with confidence that the marketing activity drove the engagement. It could have been that an acquisition marketing activity started the entire process that ended in a closed sale. That does happen. It's equally likely that a sales rep or partner referral initiated the buying process.
We know that marketing plays a vital role in building preference and driving interactions. Unfortunately we find that claiming marketing contribution with such a sweeping generalization results in undercutting marketing’s credibility. It’s simply not reasonable to believe that every closed sale was strongly influenced by marketing if the new customer happened to engage in a marketing campaign. It doesn't pass the smell test. Bottom line is that the method of tracking back from the sale is inconclusive.
A Better Way to Measure Campaigns – Integrated ProForma Campaign Tool
Most marketing teams have been successful calculating ROI. A previous blog post outlines a solid approach to making the calculation through a framework unique to marketing. The biggest struggle is the elusive task of calculating a return on the total effort. What marketing teams often miss is the ability to quantify the total impact.
Below is an example of the types of elements involved in an integrated campaign across many touch-points and channels:
The difficult part of proving a return on investment is capturing the total impact of all touch-points and activities within a campaign. A common mistake is to attribute total success to the original lead source without careful analysis of the chain of events. That's where SBI's demand generation programs benefit from ProForma campaign measurement tools.
The concept of a ProForma is to capture all aspects of a campaign into a single view. Regardless of what specific activity drives the click response (Lead Source), we know that a series of collective impressions drive response. Marketers accept the best practice that 'integrated' campaigns with multiple touch-points drive greater results. The ProForma provides a framework to capture all campaign activity, associated costs, and click metrics. This provides a comprehensive view to drive an ROI equation.
Download the Integrated ProForma template here.
There are three key parts of the Integrated ProForma
1. Campaign Activities - Build the framework around the entire set of activities for the campaign. This includes response media such as email, search keywords and online ad units that are common to track. In addition to digital media, add traditional 'offline' and campaign awareness activities.
2. Activity Metrics - For each framework component, capture the activity metrics, both impressions and prospect click and response interactions. You track the Lead Source to capture the first contact a prospect makes with your company. In addition, the conversion rates are tracked within the activity metrics.
3. Associated Costs & Profit – The cost of marketing activities is loaded into the total campaign cost structure. This includes all hard costs of media, creative development, production costs and agency costs (typically this doesn’t include internal staff costs). The projection ROI is based on the average sales price and gross margin.
How to Use the ProForma
The purpose of the ProForma is to collect the total picture of the campaign. Be careful to guide your team to use the tool to evaluate the collective result. Resist the temptation to over-analyze the results line by line. Integrated campaign activities work in concert, so do not ‘optimize’ the campaign by eliminating all lower performing line items.
The ProForma is used for Demand Generation campaign pre-planning. The framework enables your team to project results based on historical response rates. As the campaign is launched, the tool transitions to a reporting tool.
Embrace A/B testing to determine how a campaign performs with and without specific line items. What you will likely find is that the response rate declines as you remove supportive touch-points from the campaign. Test the ideal mix to optimize.
The activity metrics provide two valuable insights;
- Net New Prospects that were acquired through the campaign
- Existing contacts who participated in the campaign and their total activity supported by marketing
The value of the insight is to show the combined roll-up of activities involved in the total campaign. The CEO, CFO and sales leader can finally be exposed to the full impact of marketing efforts.
Finally, the Excel spreadsheet is a planning tool that you can put into immediate service. Ideally you want to configure your marketing automation system’s reporting engine (and/or SFDC campaign tracking) to support your tracking of the total campaign ROI. The beauty of the spreadsheet is that you can model what you expect to be reported within the Marketing Automation system.
Summary
Leverage the Integrated ProForma to provide your team with a framework for capturing the complete picture of campaign performance. Build credibility with sales leadership by providing a reliable view of demand generation campaign success.
Author: Vince Koehler
Vince Koehler on Google+
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