Driving ROI with Measurements that Matter. Jim Lenskold / Ron Ens Author of Marketing ROI, The Path to Campaign, Customer and Corporate Profitability

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1 Driving ROI with Measurements that Matter Jim Lenskold / Ron Ens Author of Marketing ROI, The Path to Campaign, Customer and Corporate Profitability

2 Lenskold Group Overview Lenskold Group founded in 1997 Partial Client List Marketing ROI book named one of the 5 most influential marketing books of 2004 Marketing profitability management ROI Framework Measurement & Analysis ROI Tools & Dashboards Workshops & Training Leading marketing ROI innovator

3 ROI Resource Page PPT Deck ROI Spreadsheet CMO Guides Lead Gen ROI 4-part article series Lead Gen research #RocktheRev

4 What Profits Can Be Generated With 10% More Budget? 12% 44% 20% #1 Answer: Don t Know 15% 9% Improve profits by more than 20% Improve profits by 10% to 20% Improve profits up to 10% No major change in profits generated Don't Know Majority of balance: more than 10% Source: 2010 Lenskold Group / emedia Lead Generation Marketing ROI Study

5 Measurement & Metric Progression Tactical Lead Quality Strategic Revenue & ROI Level Tactical Lead Quality Strategic Revenue & ROI Measurement Approach Result tracking to compare tactics and for reporting Projected conversion & value to manage lead gen Testing strategies & integration to guide mix & targeting Comprehensive measures on effectiveness & efficiency

6 Measurement & Metric Progression Tactical Lead Quality Strategic Revenue & ROI Results tracking by tactic Lead quantity Compare and prioritize tactics Driven by cost per lead No insight into sales contribution

7 Key Stages of Purchase Funnel Diverse Marketing Tactics Engaged Lead Opportunity Closed + Growth Create Awareness Educate Generate Demand Nurture Un-ready Motivate Action Qualify & Screen Sales Qualification Sales Pipeline

8 Tactical Single Attribution to Lead Diverse Marketing Tactics Engaged Create Awareness Educate Generate Demand Nurture Un-ready Motivate Action Lead Each tactic is tracked through to a lead Lead attributed to either first or last contact All tactics are compared on a single outcome Qualify & Screen

9 Results Tracking of Leads Generated Marketing Initiative Reach MQLs Budget Cost per MQL National trade show 6, $62,000 $157 Direct Mail - new product launch Webinar - Client Case Studies 8, $15,000 $82 9, $26,000 $79 White Paper 4, $15,000 $104 to inactive prospects Multi-Channel Nurturing contacts 12, $8,500 $135 8, $140,000 $215

10 Measurement & Metric Progression Tactical Lead Quality Strategic Revenue & ROI Key Metrics: Lead quantity Lead to sale conversion rate Profit per closed sale (customer value) Historical analysis to track or score conversion and value Forecast metrics and ROI to assess and improve tactics Use feedback loop to improve targeting and rank tactics

11 Lead Quality with Projected Close and Value - Single Attribution Diverse Marketing Tactics Engaged Lead Opportunity Closed + Growth $ $ $ $ $ $ $ $ $ Use history and scoring to forecast Conversion Rates Lead to Sale Opportunity to Sale Profit per Sale Transaction $ Repeat $ Retention Relationship

12 Outcomes-Based Assessment Projected Marketing Initiative SQLs Sales Expense Close Rate Sales Projected Profit per Sale Projected Profit Total Budget ROI National trade show 155 $38, % 11.6 $10,992 $127,782 $100,750 27% Direct Mail - new product launch 103 $25, % 4.7 $9,976 $47,266 $40,750 16% Webinar - Client Case Studies 202 $50, % 16.4 $11,886 $194,479 $76, % White Paper 74 $18, % 5.8 $11,802 $68,994 $33, % to inactive prospects 32 $8, % 1.4 $9,746 $13,722 $16,500-17% Multi-Channel Nurturing contacts 422 $105, % 37.6 $14,164 $531,972 $245, %

13 Enhance with Shared Attribution for Multiple Contacts Diverse Marketing Tactics Engaged Lead Opportunity Closed + Growth Create Awareness Educate Generate Demand Nurture Un-ready Motivate Action Qualify & Screen Sales Qualification Sales Pipeline $ $ $

14 Shared Attribution Tied to Lead Quality Adds Insight Approaches for Distributing Contribution Split across contacts Split across responses and interactions Identify hidden contributors Risk of crediting low impact touch points Lacks insight into synergy of tactics

15 Case Study #1 Software Company Approach to Shared Attribution $600,000 $500,000 Top Source - Website Contact Us button Prior 6 months of interactions Inbound inquiries, seminar attendance, site visit Split revenue equally across all interactions Also include multiple contacts per account Use site as buyer $400,000 $300,000 $300,000 $200,000 $200,000 $100,000 $100,000 $0 $0 Web Contact Form No Web Trial Seminar Webinar Trade marketing Show Direct Mail Direct e- Mail Last Touch Last Touch Shared Attribution

16 Measurement & Metric Progression Effectiveness Lead Quality Strategic Revenue & ROI Strategic insights guide major decisions Targeting and segmentation Multi-channel integration Behavior drivers Two primary approaches: Modeling - assess all marketing & non-marketing drivers Market testing - isolate strategic initiatives and campaigns

17 Modeling Approach Assess All Outcome Drivers Diverse Marketing Tactics Engaged Lead Opportunity Closed + Growth Create Awareness Educate Generate Demand Nurture Un-ready Motivate Action Qualify & Screen Sales Qualification Sales Pipeline $ $ $ $ $ $ $ $ $

18 Modeling Measurements Outcome Units Time Period Base Events Direct Mail Total Online Advertising Special Promo Outcome Units can be sales, leads, revenue or other impact of marketing

19 Additional Modeling Results Baseline, 68% 1/3/2009 2/3/2009 3/3/2009 4/3/2009 5/3/2009 6/3/2009 7/3/2009 8/3/2009 9/3/ /3/ /3/ /3/2009 1/3/2010 2/3/2010 3/3/2010 4/3/2010 5/3/2010 6/3/2010 7/3/2010 8/3/2010 9/3/2010 Price premium decline shows sales lift Marketing, 32% Search, 8% Cable TV, 6% Promo Campgn, 5% Radio, 5% Outdoor, 4% Online, 3% Point of Sale, 1% Sales Volume Contribution 1Q2009-4Q 2010 Baseline 1,013,971 Search 118,984 Cable TV 87,774 Promo Campaign 74,485 Radio 79,995 Outdoor 64,445 Online 40,115 Point of Sale 12,973 Total Marketing 478,771 Overall Seasonality, 0.72% Competitor Effects % Seasonality, 2.58% Competitor Effects % Competitor Effects % Seasonality, -1.56% Price Contribution Company Price Premium

20 2500 Market Test Approach - Isolate & Assess Alternatives 2000 Outcome Units Baseline includes all other marketing and non-marketing impact Control group adjusted to treatment group size Time Period Baseline Campaign Time Period can be weeks, months or quarters Outcome Units can be sales, leads, revenue or other impact of marketing

21 Market Test Results Assessment Control Group Test Group Tactic 1 Tactic 1 Offer 1 Offer 1 Sales Channel Sales Channel New Marketing Any change in strategy or tactic added to test group Results Control Group Test Group Incremental Tactic 2 Audience Reached 20,000 20,000 Marketing Responses 6,686 7, Closed Sales Profit per Sale $730 $811 $81 Total Profit $508,080 $656,099 $148,019

22 Measures Support Powerful Strategic Decisions Integrated campaigns New tactics with strategic objective Contact frequency or strategy Spending levels per medium Change in marketing mix Nurturing program contribution Market testing can capture changes in leads, sales, customer value, plus funnel changes in perceptions and behaviors as diagnostics

23 Measurement & Metric Progression Effectiveness Lead Quality Strategic Revenue & ROI ROI insights in strategic and tactical planning Optimize marketing mix, integration & spend levels Use financial scenarios to compare alternatives and improve profit potential in planning stage Insights to guide ROI improvement Funnel view for diagnostics Segment-level management

24 ROI Process Best Assumptions ROI Measurement ROI Scenarios History to guide future campaigns Objectives Strategy Tactical Plan Impact & Contribution Measurement Plan Test Variations in Plan Measurements

25 ROI Scenarios to Plan and Assess Marketing Expenses (excluding offer costs) Marketing Impact % Progression Quantity Campaign Development $10,000 Target Reached 15,000 Mass Media Advertising $26,000 Direct Mail & Mailing Services $10,000 Register for event series 17.5% 2,625 Marketing $8,000 Attend event series 64.0% 1,680 Events & Trade Shows $32,000 Accept sales contact 9.9% 166 Sponsorships $0 inactive 100.0% 166 Trade Promotion / Channel Marketing $0 inactive 100.0% 166 Social Media $0 inactive 100.0% 166 Other $0 Marketing Budget $86,000 Incremental Customers 34% 57 Net conversion rate 0.4% Marketing Staff Expense Daily Rate # of Days Average Revenue per Customer (NPV) $5,800 Staff Level 1 $ Incremental Revenue $327,983 Staff Level 2 $ Staff Level 3 $ Average Gross Margin % 40.0% Marketing Staff Expense $4,150 Profit from Incremental Sales $131,193 Other Expenses (outside of marketing budget) Other Expenses (outside of marketing budget) Sales Team Expense $33,264 Offer Cost per Sale (for sales driven expenses $0 TOTAL MARKETING INVESTMENT $123,414 INCREMENTAL GROSS MARGIN $131,193 Gross Margin - Marketing Investment = RETURN (i.e., NET PROFIT) $7,779 Return / Marketing Investment = ROI 6.3%

26 Manage Changes in Outcomes Marketing Expenses (excluding offer costs) Marketing Impact % Progression Quantity Campaign Development $10,000 Target Reached 15,000 Mass Media Advertising $26,000 Direct Mail & Mailing Services $10,000 Register for event series 17.5% 2,625 Marketing $8,000 Attend event series 64.0% 1,680 Events & Trade Shows $32,000 Accept sales contact 9.9% 166 Sponsorships $0 inactive 100.0% 166 Trade Promotion / Channel Marketing $0 inactive 100.0% 166 Social Media $0 inactive 100.0% 166 Other $0 Marketing Budget $86,000 Incremental Customers 25% 42 Net conversion rate 0.3% Marketing Staff Expense Daily Rate # of Days Average Revenue per Customer (NPV) $5,800 Staff Level 1 $ Incremental Revenue $241,164 Staff Level 2 $ Staff Level 3 $ Average Gross Margin % 40.0% Marketing Staff Expense $4,150 Profit from Incremental Sales $96,466 Other Expenses (outside of marketing budget) Other Expenses (outside of marketing budget) Sales Team Expense $33,264 Offer Cost per Sale (for sales driven expenses $0 TOTAL MARKETING INVESTMENT $123,414 INCREMENTAL GROSS MARGIN $96,466 Gross Margin - Marketing Investment = RETURN (i.e., NET PROFIT) ($26,948) Return / Marketing Investment = ROI -21.8%

27 Case Study #2 Financial Firm Leverages Analytics & ROI Predictive modeling run to score and rank prospects based on conversion & value Marketing targeted to top 30% of prospects

28 Case Study #2 - ROI Identifies Point of Diminishing Returns ROI scenario tools applied to assess the profit potential of each campaign plan Each target segment adds expense and slightly less value than the prior segment Identified dynamic thresholds for campaigns that ranged from 20% to 80% of target

29 Case Study #2 - Analytics Change Objectives & Strategy Customer behavior analysis showed 3 new purchases within 4 months converts to ongoing new buyer worth 10x value ROI scenarios changed marketing objectives Incremental Transactions Ongoing Share of Account

30 Main Opportunities to Improve ROI 1. Target High Value / High Potential Initial Prospects 4. Accelerate leakage of lowpotential prospects 3. Reduce leakage with better integration 5. Gain efficiency, eliminating low impact media Closing sales Customer Relationships 2. Improve conversion later in the funnel Closed Sales

31 Progression Supports Marketing & Sales Alignment Lead quality aligns to sales objectives Conversion Customer value Strategic & Revenue improves marketing performance in key areas Stronger tactics Better targeting More influential content Measurements can validate impact Small % improvements can be significant financially but not apparent to the sales team

32 Charting Your Course on the Measurement & ROI Path Improve & solidify results tracking Track metrics to manage lead quality Add basic ROI calculations for assessment and scenario planning Find opportunities to apply strategic measures

33 Jim Lenskold Ron Ens Additional Insights at Marketing ROI Research Studies White Papers Articles E-newsletter subscription Lenskold Group, Inc. / Marketo. All rights reserved.