Tuesday, December 22, 2009

ROMI Down to the Tactic

I had an enjoyable chat last week with a software CEO who had a outstanding command of marketing strategy and tactics. He asked some in-depth questions about demand generation and the ability to calculate a ROMI (Return on Marketing Investment) down to the specific tactic deployed in a multi-target, multi-channel campaign. I thought he raised some important issues that bore discussion in the blog.

I've found that many marketing (and operational executives) feel that once a CRM or marketing automation tool is purchased/deployed it will provide the magic bullet of calculating the program ROI of a given deal by attributing that deal being closed to a specific tactic at a specific time. I'm not suggesting that isn't possible, but would caution that that type of metric might be tougher to arrive at than you think.

Frequently I've heard feedback from salespeople who say that the deals they close were not affected by any marketing outreach as much as existing contacts/relationships the salesperson had that s/he nurtured and closed. Leads that were generated and passed through by marketing to sales weren't 'true' leads in that they already existed. And in many cases that may be true.

But the likelihood that a well-crafted, multi-target campaign helped shape and influence a complex decision chain is indeed very real. I'm not suggesting that a charter of marketing should not be to identify and collect net new leads for new business opportunities. That should be a large part of marketing's responsibility. But I'd like to make a case for level-setting in the ways in which you view the impact of your demand gen marketing investments.

If your typical decision chain consists of multiple targets (say 3-5 individuals, senior exec, middle manager/s, analyst), each with differing responsibilities to the final decision, it's likely that your campaign will include multiple offers to each target through multiple stages (AIDA) of the marketing process. Thus there are numerous client interactions/touch points that can and will take place as the decision chain educates to the problem, educates to the solution (needs recognition), assimilates proof points (needs satisfaction) and then takes an action to discuss the opportunity with a vendor.

To attribute the development of an opportunity or deal to one offer or action is very challenging in this type of environment in that it is fair to think that the sum total of numerous marketing interactions, plus the relationships that sales has had in the account, helped contribute to the deal being found and closed.

I can hear some of you asking -- then why do I invest in a demand gen initiative, in a marketing automation tool, in the creative and resource investments if I can't pin down a successful deal to any one tactic? I would argue that the way to think about this is more about attributing a deal to a collection of strategies and multiple tactics that were developed and executed as a systematic and coherent approach to help identify, capture, score, nurture, route, and track leads to deals.

In your campaign/deal post-mortems you will be able to identify certain tactics that created lift, that helped accelerate the process, that had more perceived impact than other tactics. (As an example, you can research and build models around those tactics that seem to frequently be in the mix in those opportunities that you have won. In fact that type of analysis should then inform your lead scoring standards).

But I'm not confident that you will frequently be able to reduce the success of a joint marketing and sales engagement to any one tactic. And I'm not sure you should be able to. Complex decision chains have an assortment of dynamics, including momentum, timing, budgets, politics and online/offline/human interactions that in sum help drive (or retard) the progress of the decision chain through the marketing and sales funnels.

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