ROMI-ticizing Your Marketing: Using Data to Transform Marketing into a Strategic Investment
While it may seem like a given that marketing is essential to a business, it is important to understand the reasons behind it. Marketing helps businesses to promote their products or services, effectively reach and engage target audiences, increase brand awareness, generate leads, and ultimately drive revenue. In today's competitive market, where consumers have a plethora of options to choose from, marketing can help businesses to differentiate themselves and stand out from the competition.
However, not all marketing efforts are created equal, and it is important for businesses to track the return on their marketing investment (a.k.a. ROMI) to ensure that they are making the most effective use of their resources. By measuring the return on marketing investment, business leaders can make better decisions, backed by data, on how to allocate their resources and optimize their marketing efforts for greater success.
To demonstrate marketing ROMI to business leadership, follow these steps:
Define your ROMI formula: Start by defining the formula you will use to calculate ROMI. This should include the total revenue generated by your marketing campaigns, minus the total cost of those campaigns, divided by the total cost of those campaigns. Be sure to consider all the costs involved, including staff, marketing campaign costs, materials, and any external expenses.
Track and collect data: Gather data from your marketing campaigns to determine their effectiveness. From the top of funnel lead generation, and moving down the funnel capturing conversion rates, opportunity creation and ultimately deal won/lost rates and sales revenue, each stage of the journey should ideally be tracked. You can use a combination of tools like Google Analytics, a CRM platform like Salesforce or HubSpot, and marketing automation platforms like Marketo or Pardot to track this data.
Calculate ROMI: Use your ROMI formula to calculate the return on your marketing investment. This will give you a numerical value that represents the return on every dollar spent on marketing.
Analyze the results: Prepare a summary of your findings for your leadership team. Your report should clearly show your ROMI calculation and explain the methodology you used to arrive at that number. You should also include data on the various marketing channels you used, the campaigns you ran, and the results you achieved. Breaking down ROMI by campaign type can provide valuable insights into the effectiveness of different marketing channels and help businesses make data-driven decisions on how to allocate their resources. By analyzing your results based on the different campaign types, you can make informed recommendations on which channels are driving the most revenue and propose adjustments to the marketing strategy accordingly.
Explain the significance: In addition to presenting the numbers, you should also explain the significance of your findings. Help cross-functional leaders who aren’t in the marketing day-to-day understand what the ROMI value means, and how it can be used to inform future marketing strategies. Be prepared to answer any questions they might have, and provide additional data or insights as needed.
By leveraging data to demonstrate tangible results, marketers can position marketing as a strategic investment that drives a business's growth and success, rather than simply a cost to be minimized. While marketing expenses can be significant, they are not necessarily a drain on resources if they are used strategically to generate a positive return on investment.
Viewing marketing as an investment also shifts the focus from short-term costs to long-term gains. Investing in marketing may not provide an immediate return, but it can have a compounding effect over time, leading to increased revenue and market share in the future.
