CMO's Guide to Marketing ROI
 

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What does it take to move marketing measurement to the next level, and drive your company's revenue growth in a smart way? Jim Lenskold, author of Marketing ROI: The Path to Campaign, Customer and ...

What does it take to move marketing measurement to the next level, and drive your company's revenue growth in a smart way? Jim Lenskold, author of Marketing ROI: The Path to Campaign, Customer and Corporate Profitability, and Jon Miller, VP of Marketing for Marketo help you:
Define marketing ROI and optimizing revenue performance
Develop KPIs that predict future marketing success
Effectively communicate marketing results to and within the C-Suite

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CMO's Guide to Marketing ROI Presentation Transcript

  • 1. The CMOs Guide to Marketing ROIJim Lenskold Jon MillerPresident VP Marketing & co-founderLenskold Group Marketo(@JimLenskold) (@jonmiller2)
  • 2. Topics • ROI overview • Defining and managing key metrics • Measuring marketing impact on incremental revenue and profit • Communicating with the executive team and the boardPage 2© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 3. Lenskold Group Overview  Lenskold Group founded in 1997 Partial Client List  “Marketing ROI” book named one of the 5 most influential marketing books of 2004  Marketing profitability management • ROI Framework • Measurement & Analysis • ROI Tools & Dashboards • Workshops & Training  Leading marketing ROI innovator3 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 4. How Much More Profits With 10% More Budget? 2010 Lenskold Group / emedia 12% Lead Generation Marketing ROI Research Study (www.lenskold.com/LeadGenROI) 20% 44% #1 Answer: Don’t Know 15% 9% Majority of balance: Improve profits by more than 20% increase more than 10% Improve profits by 10% to 20% Improve profits up to 10% No major change in profits generated Dont Know4 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 5. ROI Management Process Best Assumptions ROI Measurement History to guide ROI Scenarios future campaigns Impact & Objectives Strategy Tactical Plan Contribution Measurement Plan Measurements Test Variations in Plan People, Process, Technology5 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 6. ROI - Scenario Planning & Results Assessment Marketing ROI scenarios improve profit potential by comparing alternatives for new campaigns and improvement areas for repeat campaigns6 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 7. Effective Measurement Planning Campaign Measures Performance Management  Establish objectives and a clear plan  Identify “big win” measurements for action  Integrate diverse methodologies  Plan measures pre-campaign  Prioritize based on potential impact  Assess strategies, not just tactics7 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 8. 5 Main Opportunities to Improve ROI Strategies, measurements and efforts to improve performance must be prioritized to have the greatest impact on ROI Initial Prospects 1. Target High – Value / High – Potential 3. Reduce leakage 4. Accelerate with better leakage of low- integration potential prospects 5. Gain efficiency, Closing sales 2. Improve eliminating low Customer conversion later in impact media Relationships the funnel Closed Sales8 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 9. Topic #1Defining and managing key metrics
  • 10. Framework for Marketing Metrics Performance Diagnostic Leading Metrics & KPIs Metrics Indicators Metrics driving Metrics identifying Metrics predictive current financial marketing gaps and of future financial outcomes weaknesses outcomes Aggregate • Purchase Intent • Lead to Sales • Lead quantity • Web visits Conversion rate Company impact across versus targets versus trend or • Funnel leakage benchmark marketing • Average value Performance per new account • Sales velocity programs • Retention rate Incremental • Program ROI • Response rates Marketing contribution • Incremental sales • Sales accepted • Lead quality (projected Program of individual • Average value per leads conversion and value scores) conversion • # Days Lead Passed Performance marketing to Sales Contact • Cost per sale programs © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 11. Marketo’s Revenue Cycle MQL All Names Recycled Prospect SAL Engaged Awareness SQL Oppor- Cust- Sales Lead Lead & tunity omer Nurturing Database Marketing SDR SalesPage 11© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 12. Revenue Cycle Modeler Marketing SDR SalesPage 12© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 13. Key topic areas: • Balance • Flow • Conversion • Velocity Trends over time Filter/Drill into data, e.g. by Program Type, Business Unit, Geography, etc.Page 13© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 14. Marketo Revenue Cycle Metrics New Customers 80% of all deals ($5,800) • Lead to Sales Lead: 7% follow this model 34.5% • Sales Lead to Opp: 80% • 1.4 people per Opp Opportunities 1,000 Leads = 40 Opps Lead Type Variants 130 / mo • Source ($2,000) • Channel 40% of prospects • Division Leads eventually become a lead • Size 2,000 / mo ($137.50) 4.0% / month 75% 9,500 / mo 20% Paid Active Prospect Names Prospects Database ($29.33) 3,800 / mo 40% ¾ paid ($73) Unpaid ¼ unpaid ($0) 80% Names ($55 average) 10% Inactive (Last 6 ($0) Months)Page 14© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 15. Poll 1 Which statement best describes your approach to marketing metrics? (choose one)  Don’t have standard marketing metrics  Use basic marketing metrics such as lead quantity, response rates and web traffic  Use business outcome marketing metrics such as opportunity conversion , sales conversion and revenue contribution  Use business outcome metrics noted above and also forecast opportunities, sales and revenue for upcoming periods © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 16. Topic #2Measuring marketing impact onincremental revenue and profit
  • 17. Marketing Performance Measurement20% use No Tracking or Measures Methodology Use Pro Con Single Attribution 45% Easy and low cost Ignores impact of other marketing Attribute Across 21% Incorporates multiple Assumptions add Multiple Programs touches over bias revenue cycle Test and Control 11% Reveals the true Limited use; requires Groups impact of a marketing marketing exclusion program for control Market Mix 3% Effectively attributes Requires resources Modeling sales lift by tactic and (budget or staff), influence of non- detailed data and marketing factors variance Source: 2010 Lenskold Group / emedia Lead Generation Marketing ROI Research Study (www.lenskold.com/LeadGenROI)17 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 18. Prospect Generation 2H2010 Source Prospects Cost % Velocity Lead to Opp Lead (Days) Index Trade Show – Virtual 3,793 $25.44 17% 81 1.0 3rd Party Email Blast 3,302 $34.65 18% 43 0.5 Trade Show 2,703 $221.30 23% 61 1.9 Paid Webinar 1,760 $68.50 21% 60 1.0 PPC 990 $158.10 45% 42 1.4 Content Syndication 536 $82.84 12% 59 0.3 Other Paid 208 $187.50 13% 93 1.3 Website 2,871 58% 27 2.6 Sales Prospecting 1,888 26% 46 2.2 Partner Co-Marketing 903 17% 102 1.1 AppExchange 353 78% 37 3.4 Referral 80 36% 12 1.0 Other Inbound 370 100% 19 9.0Page 18© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 19. Programs AnalyzerPage 19© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 20. Track All Touches Across PeoplePage 20© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 21. Allocation Methodologies • By Time • By Role • By Program TypePage 21© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 22. Poll 2 Which of the following measurement challenges are currently barriers for your organization? (choose all that apply)  No measurements in place  Track lead quantity but no measure of sales conversion  No measure of marketing impact on revenue per sale  No measure of the impact of multiple touch points  No use of market testing or control groups  Marketing and media data not consolidated for modeling or analytics  Difficult to assess impact of long sales cycles © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 23. Topic #3Communicating with the executive teamand the board
  • 24. Dashboard Provide Clear, Consistent Insights Metrics vs. Goals Select Details Trends Alerts24 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 25. Demand Generation Forecast Prospects Q4 2010 Q1 2010 Q2 2011 Plan 9,150 11,829 12,800 Oct 11,000 Nov 11,500 11,700 Dec 12,929 11,829 Jan 12,000 Feb 11,100 12,800 Leads Oct Nov Dec Jan Feb Mar Apr May 1/1: Modified Lead Plan 1434 1512 1581 1990 2000 2060 2127 2195 definition to include all Oct 1570 1370 1600 1605 SDR activity Nov 1245 1400 1500 1612 Dec 1536 1990 2000 2060 Jan 2631 2000 2060 2127 Feb 2609 2300 2350 2450 Opps Oct Nov Dec Jan Feb Mar Apr May Gaps vs. Model Plan 104 109 114 125 130 135 135 138 Jan: Marketing +1; Sales -2; Oct 109 103 116 119 Referral -9 Nov 123 134 119 120 Feb: Marketing -5; Sales -7; Dec 137 130 134 138 Referral +2 Jan 115 130 135 135 Feb 120 140 135 138 Wins Oct Nov Dec Jan Feb Mar Apr May Total 41 37 77 24 50 59 51 62 Plan Forecast ActualPage 25© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 26. Key Lessons for Big Wins  Maximize profit potential in the strategic and tactical planning stage  Discover not just what works, but what works better  Make marketing more measurable to make it more profitable  Use ROI insights to improve effectiveness and not as a pass/fail assessment  Leverage ROI to communicate strategies, success, and gaps and to create actionable dialogue with peers and executives26 © 2011 Lenskold Group, Inc. / Marketo. All rights reserved.
  • 27. Question and Answer Jim Lenskold Jon Miller 732-292-2600 650-376-2310 jlenskold@lenskold.com jon@marketo.com @JimLenskold @jonmiller2 Additional Insights at Marketing Forecasting Whitepaper www.lenskold.com http://bit.ly/marketing-forecastingPage 27© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 28. Thank You!
  • 29. Challenge: Today’s Investments Have an Uncertain Payoff At An Uncertain Time Operational systems are not optimized for analytics and allow the data to change over timePage 29© 2011 Marketo, Inc. Marketo Proprietary and Confidential
  • 30. Program Effectiveness Forecasting Conversion Model 70 60 50 y = 50.749x-0.571 40 R² = 0.4301 30 20 10 0 3 13 23 33 43 53 63 73Page 30© 2011 Marketo, Inc. Marketo Proprietary and Confidential