Last Updated on July 31, 2020
The Rise of the Data-Focused Marketer
In the February 2019 CMO Survey, 37% of marketing leaders ranked growth as their number one challenge. This challenge crosses company size, sector, and industry. With more and more pressure on marketers to prove return on investment, how can you be sure that your calculations are right?Ready to Talk?
Marketing ROI, in part, is about getting the credit you deserve. The rise of digital marketing — where all kinds of clicks, conversations, conversions can be tracked — has changed ROI calculations forever. Now marketers can attribute value to their marketing campaigns so they can proudly take a seat in the C-Suite with operations, sales and finance. But how easy is it to show ROI? Sure your Google Analytics can show a dollar value to pages and blog posts. But does that actually mean anything? Does your best converting PPC ad really bring you more business? The path to becoming a data-driven marketer isn’t as simple as many blog posts will have you believe.
The idea for this blog post came about after a discussion with one of our PPC clients. We noticed the client in question had recently received conversions on PPC and we wanted to explore the data further with them (what better way to create future successes than to analyze past ones). However, when we mentioned it during a status meeting, their response was “what conversions?” Hmmm.
The conversion “goal” we had set for their account was entering the checkout. Which, at the time, was as close as we could get to purchasing data. But, obviously, you can still abandon a cart. So while we were looking at the PPC data with smiles on our faces (and from a PPC point of view, we had done a good job), the client wasn’t getting a significant increase in customers. As a result, we’re now digging deeper into the cross-domain tracking and behavior flows to get a more accurate picture through the bottom of the sales funnel.
We see this happening frequently. Marketers are happy that newly published content is getting more views or shares. But how many of those readers actually made a purchase? As an agency, we talk about ROI a lot with our clients. But as a marketer, are you actually proving it?
Digital and ROI
Digital marketing, unlike analog marketing, allows you to theoretically measure EVERYTHING. If you can measure everything, you can assign it a financial value. Which, in turn, will show you marketing’s ROI. But, in practice, as always, things are a bit more complicated.
Firstly, you need to be aligned with your sales team. Since more of the sales cycle has moved online and become a marketing function, rather than a sales problem, marketers have been responsible for guiding customers towards making a purchase. Once a prospect reaches out (via a phone call, form, online chat), the sales team jumps in to seal the deal. We’ve found that iIf you’re not working closely with your sales team, it’s near impossible to prove digital marketing ROI. Without sales data, you’re only telling half of the story.
Secondly, you need to make sure you’re aware of every single step a lead takes on their way to becoming a customer. Back in 2015 Salesforce said that before making a purchase it takes between 6 and 8 touches. (A ‘touch’ can be defined as anything from reading your blog, to seeing an ad on a billboard). Four years from that initial statement, we think this number is underestimated, even for low cost items. When you’re looking at higher value or considered purchases — like a car, B2B software — it can be much more than 8 touches. Marketing-related touches may also be spread out over months and carried out on different devices (mobile, desktop, work computer, partners iPad etc…).Ready to Talk?
Putting a Price On It
Another element that affects your ability to attribute value to marketing campaigns is attribution modeling. If you can see the steps a customer has taken before making a purchase, you can assign each step a value, which then helps you work out where to put your marketing dollars for the next bunch of customers. Here are four attribution models in Google Analytics:
First touch attribution – The first touch is the most important. If someone reads your blog, or clicks on a PPC ad, then after a few conversations and maybe an eBook download they make a purchase, you give the credit to the action that first got them on the hook.
Last touch attribution – Using the example above, in this case the eBook is the last thing a customer does before making a purchase. So the eBook download would get the credit for the conversion.
Position based attribution – This model gives more credit to the first and last steps from lead to customer, assigning less credit to actions taken in the middle of the journey. Position-based attribution can go up or down in a sliding scale from first to last.
Linear attribution – This model gives an equal share to each step along the way. So if there were five steps from a new lead to a conversion the credit would be split five ways.
In Google Analytics, the default attribution model is Last Click. For more complex or enterprise products or services, you may need to work with other teams to choose the right model for your company
ROI in the Wild
Is it realistic to expect to be able to bring together all this information (multiple touches, over many months, on various different devices, online and off) and work out who contributed what, where and when? And, place a value on each step in the process? No, it’s not realistic.
Even with a comprehensive CRM system like Salesforce, which can be a significant expense for many small and medium sized businesses, there is only so much data you can pull together related to customer behavior related to a purchase. Short of calling the NSA and asking for a phone tap anyway…
But, that doesn’t mean you should give up on tracking your marketing’s ROI. You simply need to be aware that the data doesn’t always give you definite answers. Do your best to complete the puzzle, even if you think a few pieces are missing.
How Many Touches Does It Take YOUR Customers?
If you want to get to grips with your ROI, you first need to map out your sales funnel. How long is it? Not sure what a Sales Funnel is, this Crazy Egg article provides an excellent foundation. As we’ve said above, your sales funnel is the number of interactions will it take from a customer first hearing about your company, to making a purchase.
A general rule of thumb is that the more expensive the item, the more touches it will take before a purchase is made. For example, if you’re looking for a watch, you’ll probably spend a bit more time checking out the Rolex website than you would if you were purchasing a Casio.
The first thing you need to do is break it up into manageable chunks. Joanna Wiebe of Copyhackers was interviewed in a Google Partners podcast about how she splits the sales funnel into different awareness stages. Think of your sales funnel into 5 basic stages that a prospect goes through before making a purchase:
- Unaware – Ignorance is bliss. The customer doesn’t know they have a problem that needs solving. No pain yet.
- Pain Aware – They’re feeling some “pain” now. They want it to stop but they don’t really know what the pain is, or have any idea how to fix it.
- Solution Aware – After doing some research they know what’s causing the pain. They’re looking for answers and evaluating different types of solution.
- Aware / Product – They’ve decided on what solution they’re going to take to take away their pain but now they’re choosing between vendors. (This is the first time you can talk to a lead directly about your product).
- Most Aware – Evaluating your product with a view to buying it to make their pain go away.
Note that from the five stages above, it’s only on stage four that you start pitching your product to customers. Before that point it’s all about education. Your web content should help explain what their pain is, what the risks of it are, and the options they have for solving it. Then, and only then, can you talk about your product. Often companies have a lot of content for stage four, but not as much for the stages one through three. To move prospective leads through the sales funnel smoothly, you need to be creating content for every step along the way.
The number of touches per stage in the sales funnel can differ depending on your product or service. For some companies, step one can take a long time. For example, if you’re pitching a jetpack for commuters, you’re going to have to spend a lot of time explaining why they would even consider this as a potentially death-defying solution to solve their rush-hour woes. But if you’re selling toothbrushes, this awareness-to-purchase stage be pretty fast as most people understand how a toothbrush helps them avoid long-term dental issues. In this instance, you would focus on step four, explaining why your toothbrush is unique and offers superior results (e.g., lower costs, reduced cavities). In Google Analytics, there’s a Time Lag reports to help you visualize time to conversion. The Time Lag report is located under Conversions => Multi-Channel Funnels.
Once you’ve know how long your sales cycle (on average) by breaking it into awareness stages, you can then see how many touches there are per stage. Then can look at which ones are performing well, and which need more (or better) content to drive users through.
If you’re like most businesses, you’re using multiple channels to attract potential customers. For example, you may use a mix of paid search, organic social posts, as well as email in your marketing campaigns. There’s another Google Analytics report — Top Conversion Paths — that shows you how your channels work together in generating a conversion. This report is located in Conversions => Multi-Channel Funnels => Top Conversion Paths.
Outside of Tracking
The last step on the marketing ROI road is often the one that is taken first: making sure your customers’ journeys are actually being recorded. Often companies will spend a lot of time putting up the signposts before they’ve mapped out the road. We think it’s best to do things the other way round.
First thing’s first, make sure your Google Analytics and Google Search Console accounts are linked to your website and tracking correctly. If you’ve had Google Analytics set up for some time, you might not have changed anything in a while. We suggest doing an audit to make sure the settings are still accurate.
Also, Google has a new (ish) tool called Google Tag Manager (GTM). GTM makes setting up tracking a lot easier. It allows you to track more than just Google data in it. It avoids the need for a bunch of scripts which can slow down your website’s performance. Remember, speed is an SEO factor. If you’re not using GTM already, consider setting it up as it will make measuring your marketing ROI elements much easier.
Once you’ve done all you can with cookies and tracking scripts, it can feel like you’ve completed the tracking phase of your marketing ROI journey. Not so fast. There are other tools you can use to help you gather data about how or why (or not) purchases are occurring.
Call recording is another way of finding out why, how, and when purchases are made. If you’re using a tool like CallRail, then you can see where the user found your phone number. And if you turn on call recording, you can review the content of the call as well. So if someone calls from a PPC ad and makes a purchase over the phone, you can clearly attribute the revenue to the PPC ad.
Another tool we use is page tracking software like Hotjar. Hotjar can show where users are visiting on your site, how they navigate your menus, and what they click on. Recording software visually shows the flow of users through your website, making it much easier to notice any patterns or trends.
Using a CRM can be another way of helping you track the steps a lead takes before making a purchase. Platforms like HubSpot can help you see which leads have opened which pieces of content or visited certain pages on your site in a very user-friendly way. There’s no digging through Google Analytics reports to find the right thing. However, tools like HubSpot or Salesforce can be expensive for small- or medium-sized businesses. Some CRMs also allow you to create automated workflows, sending emails based on customer actions so you can fully or partially automate parts of your sales cycle.
If you’re not using marketing automation software, you can still automate your sales emails through a tool like Mailchimp. In Mailchimp you can create a series of sequential and automated emails, targeting an audience segment (e.g., customers, prospects, partners). As with most email service providers, the software tracks open rates, thus giving you a good idea how your emails are performing. Then you can follow the email-related web traffic through the conversion process. And, if you have an online store, you can link it to your website’s checkout, giving you even more ROI data.Ready to Talk?
Proving Real Marketing ROI
As we’ve illustrated throughout this article, proving real marketing ROI is almost as hard as getting the data. While in theory we can all be data-driven marketers in 2019, there is still a gap between what we’re able to realistically track and what’s needed for a rigorous marketing ROI calculation. As marketing technology improves, and tools become more accessible to smaller businesses, we should see that gap reduced, making it easier for marketers to show their true value.
Until then, we have to: 1) make sure we know all the steps in our buyer’s journey, 2) create content for each step, 3) track as many data points in those steps as best as we can, 4) analyze the available data to draw reasonable and informed conclusions, 5) make adjustments with A/B testing, and 6) rinse and repeat.
As you can see, there’s not a linear path to calculating marketing ROI and showing a direct correlation to a business’ bottomline. However, if you follow our above signposts, you’ll be headed on the right track. Easy peasy, right? Ok, maybe not easy. But certainly doable.
If you need assistance in wading through your website, analytics software and marketing data, we’re here to help. Just reach out as we’d love to be your guide.