Qualifying Your ROMI
Return on marketing investment (ROMI) is the benefit or revenue generated by your marketing efforts, measured against their cost. By testing your lead-generation results, you can measure how your company’s investment of budget and time helps you to increase the number of leads and sales. You can see what worked and what didn’t, find areas where you need improvement, and justify areas where you need more budget.
The tenor of the boardroom is changing considerably. These days, executives must be clear about how they spend their money, and how that money is providing benefits to the company. That’s why many smart marketers are learning how to qualify the company’s ROMI.
Over the last decade, the chief marketing officer or vice president of marketing has become the most fired person on the company’s executive board. This is because marketers have been the last people in the boardroom to embrace the return on investment (ROI) concept, and to request their budgets in terms of ROMI. Marketing executives used to get away with spending budget on whatever they needed (e.g., $10 million for a cool Super Bowl ad), but they had no way to qualify how spending that money would provide an ROMI and benefits for the company.
But in the past 10 years, even before the 2008 economic downturn, shareholders have asked businesses to become more accountable. With the IT revolution, budgets and ROIs have become more measurable. As a result, good managers and executives have learned how to tell their ROI story. They can justify their department budget and describe how time and money investments will provide a payback for the company. They can predict results by explaining their plans and the potential benefits. Unfortunately, many marketers have yet to learn how to explain their ROMI.
As a marketer, you may find it easier to articulate and justify your marketing projections (e.g., “Give me a $10 million budget for this campaign, and I’ll return $100 million”) if you use a set of tools to test and measure your marketing efforts over the long term. You can often make more accurate predictions of the results for your next campaign if you use these tools to defend the results of your previous campaigns. Using these results will help you to win your budgets; you may even see them increased. If you have no way to predict the results of your marketing campaigns, you may find your budget decreased. Even worse, if you can’t deliver a significant and measurable ROMI through your efforts, you may find yourself out of a job.
› › › What You Should Know ‹ ‹ ‹
To review, here’s what you should remember about the strategy of lead-generation marketing:
There are several levels of strategy in lead-generation marketing. At the highest level, you must develop a lead-generation management strategy and set goals for your efforts in order to implement a successful lead-generation campaign.
Your overall goal should be to use as many lead-generation tactics as possible in your organization. In terms of lead-generation management strategy, you want to center your goals around (1) meeting or exceeding your lead quota, (2) focusing your marketing efforts on best-quality lead-generation tactics that deliver the largest number of high-quality leads for your company, and (3) using the most cost-effective lead-generation tactics.
When adopting new lead-generation tactics, you should do it carefully and systematically. It may take you a few tries to learn how to use the new tactics effectively. Continuously measure the results of the new tactics against the results of your current tactics. Also, make sure your CFO and other executives know what to expect when you are testing new lead-generation tactics.
You must continuously test and measure your lead-generation efforts to find out which tactics are the most successful in acquiring leads, and which tactics you should focus your efforts and marketing budget on.
In testing tactics against one another, you must establish a baseline tactic and a test tactic to test it against. Compare the results of the test tactic against the results of the baseline in order to find out which tactic is more or less successful in acquiring leads and which is more or less cost-effective.
Once you have tested your tactics against each other, you should establish primary tactics (tactics that are more successful and cost-effective) and secondary tactics (tactics that may be less effective than primary tactics, but may still be cost-effective and a good source of leads). You should devote more of your marketing budget and resources to primary tactics, and use secondary tactics to supplement your primary tactics.
Testing and measuring lead-generation tactics against each other is an ongoing, continuous process. This is necessary to ensure that the tactics you use are successful and cost-effective for your company over the long run.
Testing and measuring your lead-generation results will help you to justify your ROMI to your executives. The more you can demonstrate the results of your lead-generation efforts, the more your marketing budget will be protected and even increased.