Measuring Marketing Programs – Part One

It’s not so easy figuring out the kinds of results delivered by marketing programs. That’s because there are a number of key challenges that must be addressed, including:

• The timing of measurements – you are investing money in your marketing programs today, but the impact and timing of your return on investment is uncertain. Will last month’s trade show affect results next month, or maybe six months down the road, if at all? Marketers must make their best guesses on where to spend their budgets today, not knowing when to expect a payoff in the future.
• The number of touches – at least seven touches, or contacts, are needed to convert cold leads into sales, according to conventional wisdom. The actual number is not as important as realizing that multiple touches are required. But, if this is the case, how do you allocate revenue to any specific touch?
• The number of influencers – how many individuals influence a buying decision? Companies often set up buying committees whose size varies by purchase size. A five-figure purchase may require a committee of a half-dozen people, but large corporations can have buying committees of 20 or more people. Each person has influence on the buying decision, so how does a marketer know which programs will have the most impact?
• Extraneous factors – many variables cannot be controlled by a marketing department. These include macro-economic trends, weather patterns, and how well the Sales Department is trained. How can marketers justify a ROI calculation if it occurs during a sudden improvement in the economic environment? In other words, did the marketing program deliver results?

Marketers cannot just throw up their hands in the midst of such uncertainties; they must instead set up a logical framework for measuring the effectiveness of their actions. Any measurement framework is a tradeoff between accuracy and cost. Experience shows that most marketing departments start off with low cost, low accuracy measurements and then begin to experiment with more complex approaches. There are five methods that exhibit increasing complexity, and I will describe each one next time, in Part Two of this post.

Eric Bank