This is a four-part post that will explore the challenges of measuring marketing return on investment (MROI) in a high-ASP B2B business. The posts will break down this subject into three topic areas:
- Why is it difficult to measure? (2 posts)
- Multitouch and pipeline attribution are both required
- An MROI measurement framework
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Why is Measuring MROI Difficult?
Marketing return on investment (MROI) is a straightforward concept: how much return is the company receiving on its marketing investment? Company leadership simply wants to evaluate their marketing investment just like they would investment in other functions, like product development and sales. MROI is typically thought of as comparing the incremental sales generated by marketing campaigns with the cost of those campaigns. If marketing campaigns achieve less ROI compared to other investment types, like developing another new product, then leadership can shift those investment budgets accordingly.
While the concept of MROI is straightforward, the actual measurement of it is devilishly complex, particularly in business-to-business (B2B) markets with high average selling price (ASP). There are several reasons for this complexity, and this post will describe each.
Fundamentally, the high-ASP B2B sale is different from a low-priced, transactional consumer sale: there are long customer research cycles prior to sales engagement; selling cycles are many months, or even years long; and the 'buyer' is not an individual but a team that involves multiple customer departments. There are also some factors shared with consumer sales, such as the impact of online research on purchasing decisions.
If you examine the problem more deeply, you'll find seven overlapping and interrelated factors that make measuring MROI particularly challenging. In no particular order, they are:
- The Multitouch Problem: contacts engage with multiple marketing channels
- The Cookie Problem: contacts engage on multiple platforms, privately
- The Work From Home Sub-Problem: contacts are no longer working from their office
- The Buying Team Problem: prospective accounts have a buying team, rather than a buying individual
- The Lead Irrelevance Sub-Problem: those that control budget actively avoid becoming a lead
- The Delayed Return Problem: purchase cycles can exceed six months or more after initial marketing engagement
- The Relevant Investment Problem: some marketing is 'the cost of doing business' and other marketing is incremental, optional investment
- The Campaign Definition Problem: campaign definition is inconsistent, making it difficult to evaluate campaign MROI
The Multitouch Problem
This may be the most well-documented challenge in evaluating marketing execution performance, but it presents a new level of complexity for MROI measurement, especially in B2B.
The multitouch problem arises because in any long marketing and sales prospect engagement timeframe, the prospect engages with many different marketing activities. The common solution to this problem is a technique called multitouch attribution (MTA). Rather than describe MTA here, you can find a couple of excellent tutorials
here and
here. (Interestingly, the second article quotes market data indicating that only about ⅓ of companies have even implemented MTA. Wow.)
One thing to consider when learning about multitouch MTA is that the majority of the relevant literature, including the two linked articles above, is from the perspective of an all-digital customer engagement. In high-ASP B2B markets, marketing also invests in important offline engagements, like trade shows, in-person lunch-and-learns, sports hospitality, and similar. These investments are frequently a large part of the marketing budgets at these companies, so a proper MTA solution must also account for these interactions.
Using MTA, you can now assign 'value' to each marketing execution. In other words, each marketing execution now has a measurable contribution to the desired outcome, like leads or pipeline. To then use MTA as a foundation to compute MROI, another layer of complexity is introduced: the need to assign investment costs to the marketing execution. This is where it gets really tricky, because the costs need to be tracked at the same granularity, and using the same hierarchy, as the performance measurement.
For example, participation in a large third-party trade show may have a single budget number, but that budget number is likely broken down into component pieces, like hospitality events during the show, or paid media buys for pre-show promotion. Engagement touchpoints may be captured in multiple ways, like clicks on paid media, in-booth badge scans, hospitality attendees, VIP meetings in a suite, or post-show email responses. There may be several questions about this trade show, or trade shows in general, that you want to answer with MROI, like 'are hospitality events worthwhile?' or 'is paid media an efficient channel to promote trade shows?' or just the more global 'was Trade Show X a good investment?' To answer each of these questions, you need to ensure that you're including only the correct marketing touchpoint contributions to the multitouch model AND isolating the correct associated investments. For even medium-sized marketing organizations, this quickly becomes big challenge.
The Cookie Problem
Most of the technical problems marketers face when trying to measure performance tend to get easier over time as more advanced technologies are made available. The opposite seems to be happening with what I call the cookie problem; it's getting worse. We do see technological advancement, but any improvement is facing increasing headwinds from increased privacy protections, both legal (e.g.
GDPR) and commercial (e.g.
DuckDuckGo), in addition to evolving user behaviors, like an individual prospect using multiple platforms to access company digital assets.
Simply put, the cookie problem is this: whereas we used to be able to track a prospect's interactions with our digital marketing via a simple cookie on their machine, and use that cookie to associate and aggregate lots of that individual's interactions, we can no longer do so.
The WFH Sub-Problem. Adding an additional later of complexity to the cookie problem is what I'll call a sub-problem: the work from home sub-problem. One standard method of associating an anonymous visit with at least an account, if not an individual, was by using a reverse IP address lookup tool. This worked because prospect companies have a limited set of IP addresses that became known over time. Now, with so many prospects working from home, if they're not on their company's VPN, then their IP address just looks like their local broadband provider. This presents a significant new challenge for the IP lookup tools to identify accounts.
The Buying Team Problem
Purchases of high-ASP B2B technology are rarely performed by an individual in a simple transaction like consumer purchases are. Rather, they are executed by a multi-departmental buying team, potentially including people from operations, finance, purchasing, and IT. The serve in a range of purchase roles, like technical approver, budget owner, product evaluator, supplier evaluator, and so on, and all of those roles will interact with marketing campaign activity at some point.
ALL of those touchpoints, across ALL of those roles and team members, are relevant to the evaluation of marketing return. In other words, marketing return must be evaluated on an account basis, not a contact basis. That means that your martech stack must have the capability of associating contacts into accounts, at scale.
The Lead Irrelevance Sub-Problem. I only call this a sub-problem to the buying team problem because the individual lead is a subset of the buying team. However, it may be the more impactful problem. Simply put, the contact that typically becomes your first lead at an account is likely NOT a particularly important contact in the account's purchasing process.
Why is this? Modern B2B marketing techniques have been deployed and refined for about 20 years, and the targets of those techniques have come to recognize and assertively avoid them. The 'big fish' is not going to fill out your lead form. She's not going to be scanned in your trade show booth. He's not going to answer his phone when your SDR calls. Anyone sufficiently advanced in their career to have a meaningful influence on a high-ASP purchase has seen all these techniques and is immune to them. The ones filling out your lead form and being scanned at your booth are low-level players at the account. The lead is dead.
That doesn't mean that you don't want to capture leads or stop executing at least some of these techniques. (I might argue that your lead forms are doing more harm than good, but that's a topic for another post.) But leads should be treated as what they are: a simple indicator of possible account-level interest that should be targeted with a broader account engagement strategy.
(Please see the next post for the remainder of the problem statements. Reminder ... subscribe if you want to be notified when subsequent posts are published.)
