I'm not saying that most B2B companies are wrong about ROI.
But I'm going to do it because they do it.
Why? Because too many people view ROI as just a reporting metric. However, this news is often wrong without them realizing it. This is because the results are imprecise and the associated values are imprecise. This means that business decisions based on these findings are also wrong.
ROI measurement tactics should be an integral part of a marketing campaign from the start. This is not an afterthought at the end of a campaign to justify expenditure or provide (false) evidence for future campaigns.
Therefore, let's start by defining ROI.
Simply put, ROI is a metric used as a performance measure to determine the effectiveness or profitability of an investment, or to compare the relative performance of a number of different investments. ROI attempts to directly measure the amount of return on a particular investment compared to its cost.
The problem is that many companies measure ROI so narrowly that they ignore many other companies that provide a more detailed, complete, and ultimately more accurate picture of a company's profitability.
B2B
For example, B2B sales cycles are typically more complex and longer than B2C sales cycles. Achieving these goals usually requires the involvement of multiple decision-making levels, lengthy negotiations, and extensive leader preparation. It takes time and of course money. So, if you base the ROI of a particular marketing campaign on one or a number of sales without considering the additional time and effort required to make those sales, your actual ROI calculation will be incorrect.
B2C
If you are a B2C (business-to-consumer) marketer, you may be asking yourself, “Why?” The answer is that B2B customer acquisition requires more touchpoints than traditional B2C conversions. Therefore, B2C rules do not necessarily apply in the B2B world. B2B marketing is not a one-time thing like B2C. Measuring results only at the bottom of the sales funnel is actually a poor indicator of the effectiveness of the awareness tactics you use. In other words, you may be spending more money than you anticipated to achieve your campaign results. That's why it's so important that you take the time to think about and define what makes a "successful" campaign before you launch it.
budget
It's important to consider the ROI of your marketing budget from the start as part of your overall campaign. Not as an afterthought, but as an important and solid component. You might be surprised that many B2B companies don't plan their marketing budgets based on positive ROI. However, they usually plan campaigns with a fixed budget and do not include ROI measurements.
Honestly, my point is quite simple: “Identify activities that generate more revenue than they cost, and continue doing more of those activities.” The difference is that you define these activities and their costs , and the cost of measuring ROI must be included in the equation. Faster SaaS companies do this quite well, but large engineering companies, for example, tend to be more old-fashioned with fixed budgets based on rules of thumb, so they often scratch their backs and grit their teeth if the company brief doesn't live up to reality.
Ultimately, my point is that calculating ROI is not as easy as many people think, and many bad decisions for future campaigns are a direct result of misjudgment and therefore misinterpreting the results of previous campaigns.
Therefore, ROI measurement must be firmly embedded in the internal structure of strategic planning. If you want to better understand what I'm talking about here, I suggest you check out the ROI calculator we developed and use. Feel free to apply this to conversion rate attribution at every stage of your campaign from start (I emphasize the beginning) to finish.
There are many other ROI “secrets” that you weren't taught in business school, but luckily for you, I'm determined to tell you all about them.
Consider ROI when planning.
Most companies don't. They just use it as an indicator of how well or poorly the campaign did afterwards (often with bad information), which hardly explains why the campaign was successful or not.
ROI is not linear!
The success rate varies in direct proportion to the amount of funds invested. Too little and the campaign will have no effect. Too much and you can oversaturate the market. Investing $100 and making a $200 profit does NOT mean that a $200 investment will produce a $400 profit.
Think carefully.
About how your investment is spent. Measuring ROI can help you determine whether you should do more of what works and withdraw funding from what doesn't.
ROI can be difficult to determine.
Although ROI is often defined as “net profit,” it can be very difficult to rationalize a company's impact based on net profit alone. There are so many factors that influence profitability that it is nearly impossible to isolate the impact of a single company without well-designed metrics.
Return on investment.
This is often exaggerated. Attributing sales to a specific company is misleading because companies typically target customers who will make a purchase anyway. Just because a potential customer clicks on an email to make a purchase doesn't mean it will ultimately result in more sales. There is a big difference between connected sales (what you perceive to be the results of a campaign) and incremental sales (the actual increase in sales achieved).
ROI is like a bottom-feeding catfish.
You can only measure it if you fish it from the depths with the right bait.
Lower costs don't necessarily increase ROI.
Because ROI is a metric, there is a tendency to minimize costs to maximize profitability, such as when conducting direct mail marketing campaigns rather than email. But this approach is often wrong, especially in the B2B sector where sales costs are high. Therefore, you should always focus on maximizing the performance of your investments rather than minimizing their costs.
Conversion rate optimization. That's how I say it.
So how should you use ROI to run more effective direct marketing campaigns?
- Model how you want your business to run, then see how you can optimize each step of the customer journey. Using a formal marketing structure can also be very helpful at this stage.
- From the start, focus on making your investments as efficient as possible, not cheap.
- Don't just increase your activities. Consider expanding to other activities, especially if you have a high target audience. Remember that ROI is not linear!
- Finally, don't assume that ROI is the determining factor in all companies' performance, especially when measuring end-of-funnel metrics. While early funnel activities are very difficult to measure without carefully developed ROI metrics, they ultimately pay off.
