How can we make sure we’re working and spending smarter than last year? That’s essentially the question we ask ourselves over and over during those meetings that tend to happen when the calendar comes full circle.
These can be energizing times. Hope abounds when the marketing team collectively comes up for air and takes a step back for a hot second. But if you’ve been marketing for more than a year, you may also be somewhat jaded by these meetings because you’ve seen some really sound plans go by the wayside almost the very moment everything gets nuts again. It’s especially painful when the abandoned plan was supposed to help everyone reclaim control this year.
Now, with the dawn of a new decade upon us, what better time to really slow down and reflect on what’s working for us and what isn’t? And why not start with an area where it truly makes sense to slow down and stay that way?
Measuring ROI Too Quickly Can Be Counterproductive
The average length of a B2B sales cycle is six months. Yet, for every 25 marketers today, only one currently measures ROI over six months or longer, according to LinkedIn's "The Long and Short of ROI" report.
Why is that a problem?
Well, it’s a problem because the vast majority of B2B marketers aren’t actually measuring ROI. If you’re among the 77% of marketers who measure ROI within the first month of the campaign, you’re making decisions and allocating budget based on a storyline that’s still developing. How many times have you read a book or watched a movie where what you “knew” at the beginning turned out to be false in the end?
The reality is, most marketers are showing up to their book club having only read a sixth of the book.
From a marketing standpoint, many of us think we’re basing decisions on ROI when we’re really basing them on KPIs.
When we use KPIs to make decisions, we risk pouring budget and resources into a cost-per-click winner that’s producing fewer qualified leads than the campaign we chose to downsize or end. Taking it a step further, we risk doing the same thing with a campaign that produces fewer leads when the leads it does produce are closing at a higher rate.
Here's a short video that takes a bite at explaining the difference between KPIs and ROI.
Suppose your average sale is $10k. And suppose one campaign produces 50 leads, two of which ultimately close. Now suppose a similar campaign would have produced only 25 leads. Due to the different nature of the campaign, though, five of those leads would’ve closed. If you prioritize the campaign that’s producing more leads after one month, that single decision could cost your company upwards of $30k in marketing-attributed revenue.
Does this mean we can’t touch our campaigns until all the results are in? Of course not, though we do need to be more careful about the conclusions we reach and when we reach them. When we “optimize” something, we need to be more certain that we’re actually optimizing and not doing the opposite.
Unintentional as it may be, when we measure too quickly, we risk doing a huge disservice to our companies, our teammates, and ourselves. The video below further explains both the challenges of measuring ROI and the necessity of getting it right.
Knowing What We Know, Why Are We Still Measuring Too Fast?
First, measuring ROI can be hard and time-consuming in a world where we're all strapped for time. Allocating our marketing budgets based on metrics like revenue per lead (versus cost per lead) may not be the easy thing to do, but it is the right thing to do.
Second, we’re under pressure. Much of this pressure is internal, and entirely unnecessary. For instance, we force ourselves into tight budget allocation cycles where we throw whole heaps of money around with half answers. The intention is pure — a desire to nip waste in the bud – but the execution is shortsighted.
We’ve also become accustomed to instant answers. So it’s no wonder why marketing executives and managers demand that their teams show proof of performance when the proof is still very much in the pudding. Worse, we act upon those partially baked theories and do real damage in some cases.
2020: The Year of Thoughtful Marketing
We marketers will have more budget to work with in 2020. Coincidentally, thoughtful marketing goes hand in hand with thoughtful spending. It’s high time we make sure we’re working and spending smarter than we did during the twenty teens (or whatever we decided to call that decade).
So stop sprinting already – tell your teammates they can stop running themselves ragged – and join the measurement marathon. Take the first step by defining and measuring ROI over the length of the sales cycle.
Taking the marathon approach to ROI measurement is akin to being among the few members of the “marketing book club” who’ve made the effort to read the whole story. While everyone else wonders, or falsely assumes, you bring actual, irrefutable, immensely valuable answers.
Thoughtful marketing, brought about by more thoughtful ROI measurement, is the very real, very achievable opportunity that lies before us in 2020.
Will you be slow enough to capitalize on it?
View "The Long and Short of ROI" report.
