Improving B2B Marketing ROI: Thought Leadership With Merry Elrick
It’s time for B2B marketing professionals to think beyond justifying their existence and start thinking about how they can create long-term return on marketing investment (marketing ROI) for their organizations. Helping arm marketers for this challenge is The Truth About Marketing ROI author Merry Elrick, the subject of the next post in the B2B Marketing Thought Leader Interview Series.
I thought it would be glamorous. I was misinformed. (Actually, it was glamorous in the ’60s, but by the time I got into the business, everything had changed radically.) But it does give you the opportunity to use both sides of your brain, especially the creative part. And that’s just fun.
2. In your experience, what do you see as the biggest opportunity for B2B marketers striving to increase marketing accountability?
I really think marketers who focus on accountability can do some incredible, exciting things for their companies — like help grow top-line revenue, increase profits and reduce waste substantially.
Marketers need to think beyond justifying their existence, to improving ROMI (Return on Marketing Investment) to the point where they make a real impact on the enterprise. It’s a pretty exciting opportunity, and most B2B organizations have room to make huge improvements, so marketers’ contributions can be significant.
3. With the recession forcing many B2B companies to scrutinize their budgets, your book, The Truth About B2B Marketing ROI, has become essential reading. With fewer sales being made overall, what metrics do you recommend B2B marketing professionals report on to best prove their accountability?
ROI, but real ROI. Not some fuzzy concept of “return.” Marketing ROI is NOT an increase in market share, click-throughs to your web site or even revenue generated from your marketing communications.
Marketers must understand the literal definition as the rest of the world does, including everyone in the C-suite. ROI is the profits generated over and above the initial investment and expressed as a percent of the investment.
There’s a formula, but you really need to understand the nuances of how ROI is calculated in your company because there are multiple ways to interpret concepts like gross margin, net present value or discount rate, just for starters. You need to know your own company’s standards.
4. In your post, 10 Steps to Creating an Atmosphere of ROI Accountability, you make a distinction between business-building marketing activities designed to generate short-term cash flow and brand-building marketing activities designed for long-term benefit. In your opinion, should companies focus more on producing short or long-term marketing benefits during a recession?
I think people already tend to focus more on short-term, revenue building activities. This is especially true during recessions when short-term returns offer the kind of instant gratification needed in hard times.
I understand the urgency of beefing up cash flow, and it’s all the more alluring because short-term efforts can often be measured by ROI. That’s a magic metric for many CEOs, so marketers are tempted to put all their eggs in a short-term basket.
I think that’s a mistake. It’s critical to maintain long-term branding efforts, even though they are more difficult to measure and really don’t lend themselves to ROI metrics. But there are other metrics you can use for long-term brand building, depending on your objectives-loyalty, perceived quality, perceived value, brand awareness, market share. What are you trying to achieve? That’s what you measure.
The key is convincing management to continue branding efforts in hard times. The brand is an asset that must be managed-not abandoned! Especially during a recession, you can make substantial gains in brand-building.
5. Lead generation, lead management and lead nurturing. How would you rank these in order of importance in regards to improving B2B marketing ROI?
Well, you have to generate leads before you can manage and nurture them. These are all critically important. Marketers work so hard to generate leads, but often there’s no systemic procedure for managing them and they fall between the cracks. Or worse, a prospect responds to a gentle touch-point and then he’s pounced on and scared away forever. Companies need to have a strategy for leads.
6. In your opinion, are all marketing activities (i.e. lead generation, management and nurturing) quantitatively measureable?
No, not everything is quantifiable — although lead generation certainly is. You can measure how well you manage and nurture leads too. You can measure almost anything, and while I’m a big proponent of measurement, I think you can overdo it.
What’s the point of mountains of data if the data isn’t easily accessible, understood and acted upon? I find people gather data, compile it in a report, and then let the report sit on a shelf. Save yourself time and trouble and only gather data you plan to use.
7. Bonus question: Anything else you’d like to discuss?
Yes — the importance of ensuring your marketing department is working in concert with corporate objectives, especially in tough times.
When you align your marketing objectives with your organization’s business goals, you’re more than relevant-your department is an important contributor to your enterprise.
Measure outcomes, not outputs, like the number of press releases you disseminate. Management rarely cares about that, although it might be a good thing for you to track for your own knowledge.
Measure the outcomes as they relate to your business goals. For example, if your CEO is trying to build long-term shareholder value, then you want to focus on building brand equity and measuring the results.