From the Center for Strategic Relations, a twice-monthly supplement to Applying Strategic Relations, mailed at your request

Measuring Marketing ROI

Last months lesson (Designing Profitable Communications) had some points that deserved more detail, I expand on them in the featured article, "How To Design Communications That Keep Profitable Customers." (subscription)

Can you analytically measure business relationships? In past lessons, I've taught you how user behavior improves measures gained from CRM, how to develop measures for customer centric goals, and ways to improve lead generation quality -- What's the common thread?

One way or another, customer interaction points is the common thread for measuring relationship value in business! Anything measured can have a return on resources invested. If you don't have a handle on interaction points yet, you need to drop me an email with your questions.

In today's lesson, you'll discover ways to measure your marketing return on investment across customer interaction points. To create bankable results, you'll want to put into practice at least two of these strategies into action today.


Justin Hitt
Consultant, Author & Speaker

How To Measure Your Marketing Return On Investment Across Customer Interaction Points

By Justin Hitt, Strategic Relations Consultant,

Do you want breakthrough results from your marketing efforts? If yes, it's critical that you know where your efforts are right now. Too many executives know about the results they want, but don't have a clue where they stand today.

How do you know where your marketing efforts stand? To know where you are, you take a measure across each customer interaction points for both a baseline and means of identifying areas for improvement.

Measuring the return on investment on your marketing efforts across customer interaction points [1] sounds more difficult than it is. Here are a few strategies to get you started:

  1. Compare customer expectations with actual results created by actions. Tie these positive interactions with the revenue generated at that point. Compare the value of positive interactions against those of interactions where you didn't meet expectations.
  2. Compare amount invested against volume of sales generated. This is the simplest but least meaningful method of determining return on marketing investment. This method doesn't tell you anything beyond the direction of your overall efforts, but does provide a frame of reference from year to year.
  3. Track each lead by source in a contact or Customer Relationship Management system. Tying this to expenses lets you compare profitability across lead sources to determine which efforts are more profitable than others are. Invest in those sources that seem to generate the most sales.
  4. Make all advertising accountable with some sort of measured response. In a sense, know where all new business is coming from or the source of each lead generated. It's not impossible, just takes coordination between sales and marketing to tag each campaign.
  5. Compare customer lifetime value, profit per sale, and cost per sales over time. Some factors help you determine how much you can spend to acquire new customers, and where customers become unprofitable. Graph these measures over time to determine where you're attracting higher value customers at a lower investment.
  6. Have a clearly defined sales process that includes marketing efforts. Map out customer interaction points from suspect to repeat customers, including aspects of marketing, sales, and initial services. This process helps determine measures related to time in process, and can help you optimize customer acquisition strategies.
  7. Document all historical interactions in an automated system. You can't always know what data will be valuable to measuring your return on marketing investment, so it's critical to collect some transactional information automatically. The most common points collected are communications, purchases, and service requests.

Not every strategy here will be right for your business. For best results, use combinations of these strategies to find a means of accurately measuring your return.

Begin with a few basic measures introducing complexity only after your initial efforts have produced improvements. If you're not careful, it's possible to reach a point where you're spending more time measuring than producing results.

This advice will help you avoid measuring for the sake of measuring, and focus your efforts on improving actions. Remember, if you're not taking action on the information measurements give you then you're wasting time and resources.

With these strategies and a short amount of time, you'll be able to focus your efforts on your greatest returns and eliminate unproductive marketing campaigns.

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[1] If customer interaction points are a new concept to you, then fax+1 (276) 254-8747 for a special report by return fax. Please include your contact information in case there are problems fulfilling your request.

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