Measuring Marketing Effectiveness

I’ve spent a great deal of time of late looking into the issue of measuring marketing effectiveness, specifically looking at the return of investment for marketing expenditures. Marketing is often accused, and sometimes guilty of its inability to measure and map to bottom line effectiveness. In this post I thought I’d share with you my findings on ways and means to measure marketing returns, and discuss the critical importance of the sales & marketing relationship in this effort.

Lead generation is the bread and butter of the marketing department and typically the area of most significant investment area. If marketing folk are to gain respect from the business – specifically their sales colleagues – and build an effective business case for

The role of the marketing team is to generate interest in the company’s product through a range of tactics including online advertising, print advertising, tradeshow participation, seminars, webinars and search engine optimization or pay per click (PPC) advertising, as well as investments in PR and analyst relations. The objective here is to turn high quality leads over to the sales organization, which if all goes well, ultimately generate sales opportunities and revenue. The key here in measure ROI is to focus on quality, not quantity. The number of leads returned from a campaign or event is not a reliable metric. What marketing teams must measure is the conversion ratio of those leads as they move through the sales funnel. How many leads result in a meaningful conversation with the sales person? How many of those transform into opportunity? How many make it to the proposal stage? And finally, what revenue is driven from these investments?

I cannot understate how important the the marketing/sales partnership is in successful marketing ROI measurement. A united sales and marketing organization and joint ownership and responsibility for these metrics is absolutely fundamental to a successful lead management and measurement process.

At every stage there must be a well defined, closed loop process. There must be well understood criteria for lead acceptance (ideally agreed business rules set out jointly by marketing and sales), and there must be joint management and ownership over metrics produced. Marketing can feed the funnel, but if sales is not communicating constantly the results of the campaign efforts the whole system fails. There must also be a system in place that provides for an accurate, empirical measurement of these investments. Software tools such as Eloqua, married with a CRM system such as Siebel or salesforce.com provide marketing and sales professionals with the ability to measure and report consistently on lead generation performance and ROI.