Making the Case for Slowing Your ROI Measurement
January 21, 2021
The ROI equation when you buy a candy bar is quite simple: return on your investment comes from the joy and contentment you feel upon unwrapping the candy and consuming its delicious, chocolatey goodness.
But what if you try to measure the ROI of your purchase as you walk out of the store, while the bar is still sitting in your bag untouched? At that point, there’s no way to determine whether your money was well spent. You haven’t yet had the opportunity to enjoy it.
This is the trap that many B2B marketers are falling into. Measurement strategies haven’t adapted to an increasingly lengthy and complex buyer’s journey, with the impacts of a pandemic presenting added barriers to action for decision makers. While the reality of more intensive and diligent research might mean longer sales cycles, the upshot is that it creates more potential opportunities to reach buyers with helpful content.
To track real ROI, marketers must slow down. Get your copy of our latest pocket guide to find out how.
Why B2B ROI Measurement Is Caught in a Disconnect
Consider these statistics, drawn from LinkedIn internal data:
- 77% of marketers are measuring ROI within the first month of their campaign, knowingly trying to “prove ROI in a shorter amount of time than their typical sales cycle.”
- Of those marketers, 55% admitted that they had a sales cycle of three months or more.
- And only 4% of marketers even measure ROI over a six-month period or longer.
This is a problem that is growing more dire in our current environment.
These numbers reflect a general trend of lengthening sales cycles, which has been playing out for many years. But the onset of a global pandemic in 2020, along with the resulting economic impact, have triggered an inflexion in this trend.
According to the LinkedIn States of Sales Report 2020, 44% of B2B organizations have seen their sales cycles increase this year.
In a world where marketers are under pressure to show results, and often need concrete proof of ROI to earn continued investment in their campaigns and strategies, slowing down the measurement process is easier said than done. Let’s take a look at some ways to make it practical.
How Can Marketers Slow Down ROI Measurement While Staying on Track?
Here are some tips for overcoming this challenge, and driving the shift toward a more accurate and reflective ROI measurement strategy.
Spell Out the Risks of a Short-sighted Approach
Taking a more long-term view of ROI measurement isn’t about deferring accountability from the marketing department. It’s about getting a clearer and more reliable picture of marketing’s impact. This is a key point to get across to executives. Show them the statistics and explain the circumstances. Also, illustrate the downside and danger of sticking to a short-sighted plan
“We’ve become accustomed to instant answers,” wrote my colleague Sean Callahan earlier this year. “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.”
The risk of measuring ROI too early isn’t only that we’ll fail to get a full picture of marketing’s value, but also that we’ll make faulty decisions based on incomplete data.
The Varying Nature of ROI for Different Tactics
Another point that can be difficult for marketers to get across, but is critical: not all marketing ROI is the same. Content marketing, for example, tends to have a more complicated and indirect connection to revenue; the ROI equation is a far cry from the simplicity of ‘eat candy -> feel happy.’
“Management has long been obsessed with ROI as a crucial barometer of success,” Glenday writes. “Despite this, a mere 8% of marketers said they were able to attribute ROI to their content plan.”
“This apparent discrepancy is explained by Adelle Kehoe, head of content at marketing platform MVF, who said: ‘By focusing on exact ROI, you are inherently missing the point of content marketing.’ “
Content marketing exemplifies the need for a broader and longer-term understanding of ROI. When you can effectively convey the merits of thinking bigger with marketing measurement as a whole, you may find it easier to demonstrably prove out the value of your content strategy.
ROI Is a Destination, Measurement is a Journey
At Customer Think, Thomas O’Regan writes about Recalculating: How to Update 2020 Marketing Metrics to Reach B2B’s New Destination. He lays out a helpful framework for thinking about ROI: track the journey, report on the destination.
“Reports can have different goals. Metrics need to show near-term progress and long-term business results, but not always at the same level of detail across reports,” according to O’Regan. “Consider your audience. If you are communicating with your executive team, make sure reports focus on where you are relative to the goal, with just enough detail to show progress or explain unexpected pivots. For marketing functional reporting, more detail is useful because it allows internal and agency team members to diagnose performance.”
This advice gets at a key point: just because you shouldn’t try to definitively measure ROI before your efforts have a proper chance to play out, doesn’t mean you can’t measure anything. Use Key Performance Indicators (KPIs) to track the journey, show progress, and validate milestones.
The way we like to put it, in the context of a book: KPIs highlight what happened in each chapter, whereas ROI highlights what happened in the whole story. Or, to use the above metaphor, KPIs are checkpoints on the way to your eventual destination.
ROI Measurement Can Wait
In fact, it needs to wait. Give your campaigns and programs time to reach fruition and drive action, at a time where business decisions take longer to be reached. Embed a big-picture ROI measurement mentality throughout your organization, from top to bottom, so everyone’s on the same page and using the same yardstick.
Want more guidance on modernizing your marketing measurement strategy? Explore our resource page, The Long and Short of ROI Why Measuring Quickly Poses Challenges for Digital Marketers, and check out our recent Live with Marketers episode on What Marketers Should be Measuring Now.