It all starts with the premise that not all B2B marketing campaigns are created equal. Merely measuring CPL or CPI (Cost Per Inquiry) may only provide a volume metric and could in fact, contribute to high activity and poor results.
Think about it. CPL/CPI is not the right measure of success for the following:
- It overemphasizes quantity over quality
- It gives too much weight to cost and not to results
- It can be a time-sink and expense chasing poor quality leads
- It does nothing to deliver high quality, actionable leads
- The measure is applied too early in the metrics process
So, if not CPL/CPI then what?
How About Return On Marketing Measurements?
Research conducted by Accenture indicates that 68% of marketing executives in the US and UK report having difficulty in measuring their marketing campaign ROI effectively. Here are some suggested measures for you to consider using to define R.O.M. for your company.
- Common Market Share Measurements
A simple definition of the measure can be defined as:
Market Share = Total Company Sales (units or $) ÷ Total Industry Sales (units or dollars). It can also be useful to create a more dynamic measure based on multiple share factors such as:
- Customer Penetration: % of all customers in the market who buy from this company
- Customer Loyalty: purchases from this company by its customers expressed as a % of their total purchases from all suppliers of the same products.
- Customer selectivity: size of the avg. customer purchase from the company expressed as a % of the average customer purchase from an average company.
- Price selectivity: avg. price charged by this company expressed as a % of the avg. price charged by all companies.
Overall Market Share (X) can be calculated by the formula: X = a x b x c x d.
Benefit: Change in Market Share can occur by tracking factors a – d over time and is useful in diagnosing the underlying cause of the change.
- Common Marketing Expense-to-Sales Measurements
- Salesforce-to-Sales: cost of salesforce to total sales, expressed as a %.
- Advertising-to-Sales: cost of advertising to total sales, expressed as a %
- Sales promotion-to-Sales: cost of promotion to total sales, expressed as a %
- Marketing research-to-Sales: cost of mkt. research to total sales, expressed as a %
- Sales Administration-to-Sales: cost of Sales Admin. to total sales, expressed as a %
Typically, an Overall Marketing Expense-to-Sales measure will be a combination of multiple expense factors, many different than a – e, depending on the Marketing/Sales model of the company. Whatever the factors, Marketing Expense-to-Sales can be calculated as the sum total of a – e, expressed as a %.
Benefit: These measures, when monitored, can help a company to insure it is not overspending to achieve its sales goals.
At the end of the day, all that marketing is supposed to do is help somebody sell something. Focusing on Cost Per Lead as a measurement does not take into account the myriad of other factors that go into generating a successful sale and may actually do more harm than good in allocating resources to process those leads. Smart marketers need to identify those measures that can lead to the greatest sales for least effort, i.e. the best ROI. Establishing your own R.O.M. can help make your marketing as efficient as possible.