Wednesday, January 25, 2012

Stop Trying to Measure Marketing ROI

For the past several years, CEO's and CFO's have been demanding greater accountability from the marketing function, and they have been pressing marketers to prove the value of their activities and programs. In this environment, return on investment (ROI) has become the "gold standard" for measuring marketing performance. In a recent study by IBM, 63% of CMO's said that marketing ROI will be the most important measure of their success by 2015.

Return on investment has been a widely-used business performance metric for at least eighty years. It's a concept that business executives are comfortable with, so it's understandable that CEO's, CFO's, and marketers want to use ROI to evaluate the performance of marketing investments. In addition, many marketing writers and pundits contend that it's possible to calculate the ROI of almost any marketing activity. Unfortunately, however, it's not always easy or even possible to determine an accurate ROI for some marketing activities or programs.

Some time ago, I wrote a series of posts that discussed some of the issues relating to the use of ROI to measure marketing performance. You can find those posts here, here, here, and here. The point I want to make in this post is that if you can't accurately attribute revenues to a marketing activity, you can't calculate an accurate ROI for that activity.

The "revenue attribution" issue is particularly challenging for B2B companies that have complex, multi-step marketing and sales processes and long demand generation cycles. The diagram below illustrates the problem. This type of diagram is known as a cause-and-effect (or a "fishbone") diagram. Cause-and-effect diagrams are used in process improvement work to identify all of the possible causes of a given problem. In this case, I'm using the diagram to identify all of the marketing and sales interactions that occurred between a company and a prospect who ultimately made a $100,000 purchase.

In this hypothetical situation, the prospect was sent six lead generation offers and responded to the last of these offers. The prospect also:
  • Received and responded to several lead nurturing offers
  • Visited the company's website and viewed or downloaded several content resources
  • Participated in several meetings and other activities with the company's sales rep
The question is:  How do you attribute the $100,000 in revenue to the marketing and sales activities that played some role in the purchase decision? What percentage of the revenue do you attribute to the lead generation programs, to the lead nurturing program, to the website, and to the direct selling activities? In reality, there's no way to accurately and reliably attribute revenue in these kinds of circumstances. Even our hypothetical prospect probably couldn't tell us how much each marketing/sales interaction influenced his/her purchase decision.

In these circumstances, it can be extremely difficult, if not impossible, to determine the ROI of an individual marketing activity. Many marketing activities do not produce revenues on their own. They must be combined with other activities to generate revenues. When a marketing activity is one of several interdependent activities that are all required to entice prospects to buy, you can measure the ROI of the whole group of activities, but not of any one of those activities.

This does not mean that you can't measure the performance of individual marketing activities. For example, you can and should measure the performance of your lead nurturing program by comparing the conversion rates of prospects who are nurtured with those who aren't. There are many metrics that can be used to evaluate the performance of marketing activities and programs, but you can't always use ROI.

OK, the title of this post may be a little misleading. ROI should be used in marketing whenever and wherever it's appropriate. Just don't try to use it everywhere.

Tuesday, January 17, 2012

Finding the Gaps in Your Marketing Content

Do you have all of the content you need to effectively market and sell your products or services? If you're like most companies I work with, there are probably a few "gaps" in your content. It's important to close these gaps as quickly as possible, but first you need to know what specific types of content are missing from your inventory.

To find the gaps in your marketing content, you need to perform a content audit, and the basic process for an audit is shown in the following diagram.

If you'd like to learn more about creating buyer personas, defining buying process stages, and identifying buying stage questions, please take a look at our white paper titled Two Powerful Ways to Make Your Marketing More Relevant. (To get a copy of this white paper, just send me an e-mail at ddodd(at)pointbalance(dot)com.) In this post, I want to focus on mapping existing content assets to buyer personas and buying stages.

The purpose of content mapping is to link each of your content assets (white papers, case studies, etc.) to one or more buyer personas and one or more buying stages. The mapping process is easier if done in two stages.

Map Assets to Buyer Personas

The first step is to create a buyer persona map that links your existing content assets to buyer personas. When mapping assets to buyer personas, the basic question you ask is whether an asset contains content that will appeal to a given buyer persona. Does the asset address issues that will be relevant to the buyer persona? Is the asset targeted for the persona's job title and industry? Does the asset focus on the specific problems and challenges facing the buyer persona?

I use a simple spreadsheet to create a buyer persona map. The first column of the buyer persona map contains the title or a brief description of the asset, and the second column is used to identify the asset type (a white paper, a case study, etc.). An additional column is used for each buyer persona. Each content asset is entered on a separate row in the map. The example below shows what the beginning of a buyer persona map would look like. In this example, no content has been mapped to Buyer Persona 4. If you complete your buyer persona map and have any buyer personas with no assigned assets, you obviously have a major gap in your content.

Map Assets to Buying Stages

The second step in the process is to create a buying stage map that links your content assets to specific stages in the buying process. When mapping assets to buying stages, the basic test is whether the asset contains content that answers the major questions that a potential buyer will have at that stage of the buying process.

In this step, you'll need to create a buying stage map for each buyer persona. Once again, I use a simple spreadsheet to create the buying stage maps, and a highly simplified version of a buying stage map is shown below. The first two columns in the buying stage map are the same as those used in the buyer persona map. In the buying stage map, an additional column is used for each stage of the buying process. To create a buying stage map, first select a buyer persona, then go to your buyer persona map and identify all of the assets that you have mapped to your selected persona. List those assets in your buying stage map and link each of those assets to one or more buying stages. Repeat this process until you have a buying stage map for each of your buyer personas.

When you complete this mapping process, you'll have a clear picture of where the gaps in your marketing content are and what kinds of content you need to fill the holes.

Monday, January 9, 2012

Why Persistence is Key to Effective Lead Acquisition

If you're like most marketers, lead generation will be one of your primary marketing objectives for 2012. Consistently acquiring enough new leads has become a major challenge for many B2B companies. Because business buyers now have access to a wealth of online information, they can easily perform research and gather information about products and services on their own. This makes them less likely to respond to lead generation campaigns.

The lead generation challenge is not entirely new. Lead generation has always been a numbers game to some extent. The old saying - "To find a prince, you have to kiss a lot of frogs." - is an apt description of the lead generation process. Empowered and independent buyers make the job even more difficult than it was in the past.

There is no simple solution for the lead acquisition challenge and no silver bullet that will completely eliminate the "frog kissing." There are, however, several steps you can take to improve your lead acquisition efforts.

First of all, it's critical to have an inbound marketing program that's appropriate for your business. Inbound marketing techniques are designed to make your company easy to find when a potential buyer starts to look for the kind of solution your company provides. In today's environment, not having a good inbound marketing program is the equivalent of not having a line in the water when you're over a school of fish in a feeding frenzy. I'll have more to say about inbound marketing in a future post.

There are also several ways to improve your outbound lead acquisition marketing. These are basic, well-known marketing principles, but they're worth repeating.
  • Define your target market - Understand what kinds of companies and buyers make your best prospects and focus your lead acquisition efforts on those buyers.
  • Use accurate data - Make sure that your prospect contact information is accurate. If you're planning to purchase or rent a mailing list, check the track record of your list provider for accuracy.
  • Make your offers as relevant as possible - Even at the lead acquisition stage, you should know several things about your target audience, such as the kinds of companies they work for and their job titles. Use that information to customize your offers to make them more relevant and compelling.
Following these three principles will make your lead acquisition efforts more effective. But there's a fourth component of effective lead acquisition that's equally important - persistence.

In the 1930's, the film industry conducted research and concluded that, on average, a person had to see seven advertisements for a movie before he or she would buy a ticket. Over time, this concept became widely used throughout the marketing industry and came to be known as the Rule of 7. In its current incarnation, the Rule of 7 says that a potential buyer must be exposed to a marketing message seven times before he or she will respond.

Seven may not always be the right number, but it's undeniable that it takes more than one offer to entice most potential buyers to respond. This is especially true in lead acquisition, where you are reaching out to potential buyers who may know very little about your company.

So, you need to treat lead acquisition as an ongoing process - a series of planned contacts that are regular and relatively frequent - rather than as a one-time campaign or sporadic event. When it comes to marketing in today's environment, the old saying needs to be expanded a bit:  "To find a prince, you have to kiss a lot of frogs, and you usually have to kiss the frogs more than once."

Monday, January 2, 2012

More Work is Needed to Maximize the Potential of Content Marketing

Last month, the Content Marketing Institute (CMI) and MarketingProfs published B2B Content Marketing:  2012 Benchmarks, Budgets, and Trends. This report is based on an August 2011 survey of almost 1,100 marketers, and it provides a great snapshot of the current state of B2B content marketing. CMI and MarketingProfs performed a similar survey in 2010, so some year-to-year comparisons can be made.

In many ways, this survey confirms what we already knew - that content marketing is now a core component of an effective B2B marketing program. Consider just a few of the major survey findings:
  • Nine out of ten B2B marketers are using some form of content marketing.
  • The top content marketing tactics (by usage) are articles (79% of respondents), social media other than blogs (74%), blogs (65%), eNewsletters (63%), and case studies (58%).
  • Comparing 2011 to 2010, the use of blogs and videos both increased by 27% and the use of white papers grew by 19%.
  • Companies are spending about 26% of their marketing budgets on content marketing efforts, and 60% of respondents said they will increase spending on content marketing in 2012.
Overall, the survey results show just how vital content marketing has become for B2B companies. But some of the survey findings also reveal that B2B marketers still have work to do to realize content marketing's full potential.

For example, when survey participants were asked to identify their business goals for content marketing, 68% cited both brand awareness and customer acquisition, and 66% selected lead generation. Only 39% of survey respondents identified lead management and lead nurturing as a primary content marketing goal. In fact, lead management/nurturing was the lowest ranking goal identified by respondents. This result may be due in part to the characteristics of the survey respondents, but I suspect it is primarily due to the fact that many companies have not implemented lead nurturing programs. Therefore, many marketers don't fully appreciate the essential role that content plays in effective lead nurturing.

The CMI/MarketingProfs survey also reveals that more work is needed to make marketing content relevant to potential buyers. When asked about how they segment or tailor their content, 57% of respondents said they use profiles (job titles, personas, etc.) of decision makers, and 51% said they use company characteristics (size, industry, etc.). However, only 39% of respondents said they tailor content for specific stages of the buying process, and 12% of respondents do not tailor their content in any way.

For content to be truly compelling, it must answer the questions that are most important to buyers at a specific point in the decision-making process. And, those questions change as buyers move through the buying process. So, the most compelling content is designed for specific buying stages.

The use of stage-specific content is one defining characteristic of an effective content marketing program. The CMI/MarketingProfs survey asked participants to rate the effectiveness of their content marketing efforts on a scale of 1 to 5. Forty-five percent of those respondents who rated their efforts as "effective" or "very effective" (4 or 5) said they tailor content for specific buying stages. Only 29% of the respondents who rated their efforts as ineffective (1 or 2) said they use stage-specific content.

If you're thinking about beginning a content marketing program, this survey is a great resource for learning about what is working. If you're already using content marketing, this is a great tool for benchmarking your efforts.