Know-How Exchange : Research/Metrics

You can simply look at how much you spend on each marketing campaign and then evaluate if that campaign brought in x number of marketing dollars.

Some industry standards exist in the not-for-profit world, but for everyone else it's not required reporting nor is it generally shared. The realities are far more complicated and nuanced than accounting generally allows.

In part an ROI goal depends on where you are currently. Take the last campaign and make reasonable improvements. Goals should challenge but not frustrate because they're impossible (maybe I'm stating the obvious).

Another part depends on product specifics. They don't all react the same in the marketplace, even in the same category.

Another part depends on margins. Depending on the CEO and whether he/she's into gross sales and propping up the share price or whether it's about business health and real profits and margins, they don't all have a deep appreciation for ROI based on gross sales.

But, the crux of the matter from a marketer's point of view is that so much of the marketing world is focused on brand. People aren't so much sold on things anymore. Rather they make their own decisions to buy, and those decisions are driven by brand perceptions, word of mouth, and experience.

So, ROI measures are part of the picture. But, brand affinity measures are another part. Spending money today on research to improve products and get into the minds of consumers doesn't have an impact tomorrow morning on whether a lead comes in or whether the lead is converted. But, it will have an impact on the brand and on sales over time, independent of promotions.

I therefore like a dashboard concept. Several key indicators measuring effectiveness of promotions but also those measuring satisfaction, loyalty, awarenesss, affinity and things driving the success of your brand.

Jaime Collins

As others have said, there is no reliable industry standard. Every company, in every industry, has its own objectives and metrics. Some are very rigorous and measurable, some are not. Some track marketing results separate from sales results, some lump them together. And some have different bookkeeping approaches than others.

The net result is that there are no clear standards by which to measure marketing ROI or effectiveness.

Your best bet is to figure out what your own needs and objectives are, and what it's worth to YOU to achieve your objectives. Then spend what it takes, without spending more than the variable profit on the sales you generate.

It would be nice to have some industry standards, but it's not the way the world works ... at least not now.

Good luck. Sorry we can't be more directly responsive, but we'd be misleading you if we tried.

Things get a little murky when you try to mix marketing and sales without a clear understanding of the sales environment.

And getting marketing parameters from a book? Oh, yeah.

Much of the discussion above centers on lead generation. If that's how your company defines marketing,, fine - but there is a lot more to it.Lead generation assumes that the buyer will purchase within the next two buying cycles. Marketing horizons go beyond that.

Also, the statement that people aren't sold as much as they buy is - on the face of it, correct - but a nonsensical statement without an understanding the role of the sales force. A good sales force will help them buy - your products. That's what the solution selling concept in sales has been about for the last two decades. It's now the industry standard in high-tech.

The concept of brand is much overstated - and an offshoot of the "total quality" movement of many years ago - and a concept pushed very hard by advertising agencies. "Brand" isn't created by large advertising expenditures - rather, your "brand" is the experience your customers have every time they deal with you. That's how the small, scrappy competitor outsells the large "brand" name - they convince the customer they will get a better solution than that provided by a "name brand" - and they then deliver that solution - happens all the time.

Only lead generation programs with a clearly defined length can be judged by ROI. Much of marketing (such as PR) does not fit that definition. If it did - you would have marketers coming out of accounting schools. Instead - marketing takes a lot of judgment - something the quants just aren't comfortable with..

Few would argue that Steve Jobs isn't real good at marketing. How much ROI analysis do you think he does? Not much. Think about it.

As my understanding clear goal, completion time frame and
Execution is very important. Must teach the people such a way that any thing touch to be executed some ways. That is only the way any sales can grow.

A standard marketing ROI is like a standard COGS or a standard markup. Or a unicorn - no such animal.

These are the facts of life from a marketing perspective.

1. The rule is that marketing must cost less than it adds to the bottom line, or the marketing manager will pay the price, eventually.



2. A marketing investment is only an investment if it gets a return - any return - greater than the original investment. Otherwise it's called an expense and the accountants will want it cut.

Hope that helps.

Sorry, but have to weigh in on this one. You started with a quote: "In Roy Young's article "25 Metrics to Prove Marketing Drives Sales" he states that "a level of marketing spend is a better investment than an expenditure on more sales reps.""

First, if your sales reps aren't accountable to the marketing group in a meaningful and direct way, you will have problems. The sales team will sell to meet their goals and their bonus plan, not yours. They should be accountable to the marketing group and, in fact, be a marketing function. You control their budget and therefore their success. After all, they control yours everyday in the field.

Having said all that, I of course find it very concerning that a $1B company that likely spends at least $200MM (assuming the the $1B is a revenue number) on advertising and promotion doesn't know or have benchmark metrics to measure success. I'm concerned, but not surprised. Unfortunately, this is the case in many companies and the reason why many good marketing programs get killed (because no one could prove they worked) and why bad programs go on and on (because no on could prove they didn't work).

Everyone has already stated that there are no standard metrics out there for what "good" is and I agree with that. However, I don't think that even if there were, this would be helpful to you. The question that your management team is asking is if their marketing spend is worth it. To put it another way, should I be spending on marketing when I could be spending on something else (like research). They want to know the opportunity cost. Instead of searching for benchmarks externally, look internally. What is the ROI if the dollars were invested somewhere else. If its a 2 to 1 if they are spent by the research group, then your program had better beat 2 to 1. There's your benchmark.

Consider what the opportunity cost is and where the dollars would go if not to marketing and beat the ROI for that investment.

JMR

There are multiple facets to successful marketing and sales. The best marketers integrate these efforts and shun none. For many products, solution selling and marketing promotions are as important as any other facet in the mix, perhaps even including branding. But, underestimating the power of branding would be a mistake, even in custom technology solutions. Despite our huge brains and our prowess in science and accounting, humans are not very rational creatures. Our decision making remains largely based on emotion. One has but to watch either of the upcoming political conventions to see the evidence of that... and to see both selling and branding at work.

Politics can inform our measurement conversation because its in our faces everyday. Candidates and campaign directors live and die on how the electorate responds to solutions selling, to a sales force, to promotions, and to branding. None of their measurments offers any absolute answers (with the exception of the election itself), but that doesn't stop them from working every day to understand what their customers are thinking and how their communications are impacting their behavior.

i'd hardly believe that its better to spend on marketing (passive) than sales reps. Reps are a profit center-- and no matrix is required. They must pay for themselves and for several support staff in the company. No excuses. Try that with any marketing plan or tactic.

Sell Well and Prosper tm