Metrics, Money, and Marketing ROI

Although what seems like it should be scientifically defined, I still get questions on how concrete ways to measure demand generation to either justify or increase your marketing budget.

In looking at costs, I typically include the “variable” costs which include development of content (eBook, video, etc.), and paid promotion (paid search, banner ads, e-mail list rental, etc.)  While I do not include staff costs, you may want to do this as obviously they need to be paid for and justified. My reasoning is that the most important reason to measure is to assess your most effective programs and marketing channels. To the relative costs and returns are key. Including staff costs you are basically saying, should we do marketing at all. (Which may be a valid question…)

To compare campaigns, I use the following metrics:

1)      Cost per acquisition (CPA)

2)      Cost per qualified lead (CPL)

3)      Revenue returned per dollar spent on programs (ROI)

An acquisition, is getting a new name into your database: someone to nurture, drip market to. They register for a web cast, view a video, register for your blog, etc. To be clear these are relatively unqualified leads. However, based on the marketing channel, I expect you will see large variation in costs and quality across your promotional channels. For example, someone doing an organic search and viewing a customer video is probably more qualified than someone responding to a direct e-mail. Since you might be promoting the same content across multiple channels, I do not include the cost of the content development (asset) in the CPA.  The main goal of measuring the CPA is to see the most effective marketing channels.

Once you look at leads further into the pipeline, I include the cost of the content when measuring CPL. My logic being is that you will often create content and promote it across multiple channels. The main goal of measuring the CPL is to assess the most effective messaging and content.

Finally, the ultimate goal to close business. One question that always comes up is which campaign do you credit the deal to? Obviously, customers may participate in multiple campaigns. One option is to allocate the revenue across all campaigns a prospect participated in.  However, I find that gets pretty messy. My simple rule is that is the campaign delivers a qualified lead that enters the sales pipeline, then the forecast and closes, it gets 100% credit. While I recognize there are influencers and drip marketing that builds brand, I treat that as gravy.

Of course the definitions of lead, qualified lead need to be well defined and consistent across sales and marketing.

What other variations do you find helpful? What program and channels produced your best ROI? Finally, with the shift to content and inbound marketing how does this affect you investment in promotional channels, content creation, and staff?