Measuring Marketing ROI – How Low Can You Go?

Following a previous article on marketing metrics, many of you raised the question of measuring marketing impact on the company bottom line. While the general consultant answer – “it depends” – would hold true here as well, my real answer to most of you in the enterprise software world is simple but disappointing: YOU CANNOT. I can hear some of you crying foul as you're reading this answer: “With all the talk about ROI, marketing still refuses to be measured.

What good are all these marketing metrics if you cannot measure the impact on the bottom line?” Before you get all excited, let me ask you some similar questions: Can you measure the impact of your product development on your bottom line? Can you measure the impact of every sales call on the bottom line? Reality is that your company's bottom line is impacted by too many variables. Establishing statistical dependencies when many variables are involved requires large samples of data.

In response to a recent IDC survey, only two out of the ninety companies surveyed had overall marketing ROI measurements, and these two were companies with over $10B in sales. You may have this kind of data if you are a large company or if you sell low-cost software. But for a young enterprise software company that closes 10-50 deals a year, it's going to take a while before you have enough data points to establish these dependencies.

In this timeframe, many of the variables are going to continuously change - the economy, your product, the number of references you can provide – to name just a few. I am also leery when people try to attribute a sale to specific marketing activity.

This may work when you sell online, but in a solution-selling environment, where the sale cycle is 6-18 months long, there are likely to be multiple marketing activities that contribute to each sale.

Does it mean you have to give up measuring your marketing? Not at all. Here is what you can do:

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Eran Livneh (elivneh@MarketCapture.com) is president of MarketCapture (www.MarketCapture.com), which provides results-based marketing services to B2B software companies. He also publishes the MarketCapture blog.