As promised, we’ll begin our look at specific ways to measure marketing programs. One of the simplest is called first touch/last touch. The concept here is to associate a marketing program with revenue from a deal. A first touch credits the revenue to the marketing program that first generated a lead that eventually ended in a deal. For example, if you hold a webinar and an attendee subsequently purchases your product, the webinar would be the first touch and get the credit.
A last touch attribution, as you might suspect, credits the last marketing program that interacted with a lead. For instance, if our webinar lead subsequently attends a product demonstration before making a purchase, credit would go to the demonstration, not the webinar.
Marketing departments like this measurement because it is relatively simple to implement and track, gives feedback about the stages of the revenue cycle, and can be used to calculate an investment-per-lead metric. On the down side, it ignores later (or earlier) contributors to revenue, favors lead generation over lead nurturing, and doesn’t indicate the quality of the lead until the deal closes.
Another problem with a simple first touch/last touch measurement is that there may be a substantial lag until revenue is collected, so your current marketing ROI may be incomplete for a long time. As you can see, this approach favors short-term deals, since they show results sooner. However, you should be more interested in building long-term value, not short-term results. Marketers solve this shortcoming by adding revenue cycle projections to the measurement. For example, you can extrapolate the long-term value of a trade show based on revenue earned at the beginning of the revenue cycle (at the time of the trade show) and then projecting forward to later stages based on historical data (for instance, long-term results of last year’s trade show).
Revenue cycle projections focus on the impact of a program through all stages of the marketing and sales funnel by estimating the future value of current investments. This places emphasis on lead quality, not quantity. It’s not a perfect metric – it still only gives value to a single touch (first or last) without accounting for the contributions of other touches. Your estimates may be way off, and in any event the estimates must eventually be matched to actual results.
We are therefore obliged to look at more powerful (and complex) measurements if we want to get a good feeling for the value of our marketing programs. We’ll continue next time with such a method – allocation across multiple programs and people.
