Why multi-touch attribution is critical to calculating marketing ROIby
In my last piece, I went through some of the best practices that you can put in place when creating an ROI programme. However, in defining marketing ROI, there are plenty of mistakes and missteps that can happen along the way. Here are some pitfalls to avoid:
1) Never calculate your ROI with a single touch attribution model
Single touch attribution models like First Touch and Last Touch don’t provide a complete view into marketing’s influence on sales. Last Touch attribution tends to over-emphasise the influence that sales has on revenue, while First Touch models will show marketing’s role in lead generation, but not in the wider lead-nurturing process. While these approaches can provide good starting points, they are not ideal for showing cases where marketing has generated leads or engaged customers successfully through campaign activities that have yet to turn into revenue.
Looking at multi-touch attribution is critical in calculating marketing ROI as it recognises all the marketing touch points that take place prior to the start of the sales cycle, as well as those that occur during the sales cycle. It also counts any completed activities that have played a role in accelerating sales cycles, even when the marketing team did not generate the original lead.
Since multi-touch attribution models are harder to calculate, many marketers instead use the number of MQLs (Marketing Qualified Leads) to show value. This creates an internal debate between sales and marketing, questioning whether MQLs are really sales-ready leads. Implementing a multi-touch attribution model can help defuse this internal political situation. For example, a multi-touch attribution can be set up to calculate ROI by counting both the opportunities that are closed and won, alongside those MQLs that meet a set of criteria for being “ROI-pending.” This will give credit to sales and marketing fairly and evenly, and encourages more collaboration around results.
2) Don’t get boxed into including only what you can measure
Marketers have more than their fair share of software solutions, with each tool purpose-built for a specific area such as social, mobile, web analytics, email targeting and more. As a result, marketers can often find it hard to get a single view of their customer data. To compound this problem further, this limited view often does not include offline channels or those areas outside of marketing’s remit, such as sales or partner channels.
In these situations it is important not to be limited by the tools you have today. Choose platforms that can integrate online data from social, web and mobile networks with data from offline channels recorded in CRM, call centre and service desk systems to provide a single view of each customer. Alongside this, link into data from other applications held by the finance and operations teams to establish how profitable each customer is over time.
Reaching this end-point requires multiple steps rather than taking one giant leap. As more factors get included within the overall mix, the short-term and achievable goals can add up to more significant ROI measurements. Therefore, it is critical for the tools used for the attribution measurement to be able to expand and add data sources over time.
3) Don’t get defensive
Marketing ROI has traditionally been used to show that marketing is more than a cost centre. However, this invites skepticism - instead of framing the value of marketing ROI around “what has marketing done lately?” it’s important to position any attribution schemes around “where is marketing investing, and why?”.
This change in mindset is essential as more creative projects are brought in. Not all of these projects can show tangible results. In these situations, it is important to separate the definition of ROI for creative projects against those for lead generation programmes.
In other cases, where you are comparing lead generation programmes against each other, it is important to take an objective point of view. In some cases and where appropriate, you can show that, despite your best efforts, some programs are not yielding the required results. Based on this data, you can pivot your strategy to channels that are meeting requirements. Discussing these results with the business can create more immediate trust and support from the broader organisation based on ensuring that the sales team sees that marketing has their best interests at heart.
4) Don’t put everything in one big bucket
Marketing ROI is often treated as one big figure, comparing the budget spend to sales delivered. However you cannot take a ‘one size fits all’ approach to marketing ROI. Instead, it is worth breaking down ROI into different categories. Some areas to consider are:
· Impact of marketing on new customer acquisition
· Impact on pipeline
· Impact on sales velocity
· Impact on customer engagement and retention
· Impact on brand awareness
Having these categories clearly defined helps you become more objective, pinpoint what works and what doesn't and sets specific and measureable goals for each area. With clear upfront definition on each of these categories, you can even advocate for joint ownership in some of these areas.
Modern marketers can no longer afford to be in a vague position when it comes to marketing attribution on revenue. However, the motivation behind measuring marketing return on investment should be more than just showing off or proving value.
Today, marketers can know which of their programmes yield better results in terms of new business within their most important target markets, demonstrate what campaigns accelerate sales and which ones contribute to upsell opportunities. This use of marketing analytics can contribute valuable information to the broader sales, service and finance teams, providing a focal point for information-sharing and collaboration. By avoiding the pitfalls, this approach ensures marketing can achieve bigger and more aggressive goals for the entire company.
Farnaz Erfan is director of product strategy for business intelligence and analytics experts, Birst