These days, business leaders demand more than gut feelings to back up marketing spending decisions. No wonder CMOs are turning to marketing models and advanced analytics to improve the ROI on their ever-growing list of marketing programs.
As most of us know, ROI helps to measure the return on investment from the amount you spend on marketing efforts. Sometimes called MROI for marketing return on investment or ROMI for return on marketing investment, it’s a way to evaluate if your marketing costs, whether for a single project or your entire marketing mix, are getting you more or less than what you are spending. In other words, if you spend a $1 do you get a $1 or do you get $10? Do more of the things that get you $10.
The ability to measure ROI helps to answer questions like:
- Are you getting the sales you need to hit your targets?
- Should you invest more on retaining customers?
- Does paid search deliver enough lead generation bang for the buck?
Even better, once you understand which marketing programs and campaigns are providing your organization a positive return on investment, you can make smarter decisions regarding where to allocate your often limited marketing resources.
But ROI alone can’t reveal the insights you need to make better marketing decisions across several, multi-channel campaigns, focused on a variety of segments, driving dozens of different behaviors. For that kind of strategic planning, you need marketing models.
The Power of Marketing Models and Advanced Analytics
Marketers have more channels than ever at their disposal: social media, email, display, paid search, direct mail, events, case studies, the list goes on. It can be difficult to understand which channel truly delivers the best results for your business.
The good news is that marketing models and other advanced analytics methods, can help you analyze consumer behavior data to determine just about any marketing program’s effectiveness. You can also uncover ways to manage, optimize, and scale marketing campaign performance.
If you don’t have one already, you should take time to create a customer journey map, making sure it outlines the interactions your customers experience with your business at each stage of the buying cycle. This is a critical first step in beginning to use marketing models to assess the success of your marketing efforts.
With a customer journey map in hand, you can take advantage of some of the most common models.
Common Marketing Models
Attributes all credit for leads/sales generated to the original source.
Best for: Determining which of your channels are generating new prospects.
Attributes all credit for leads/sales generated to the last source that touched the lead.
Best for: Determining which of your channels closes the sale.
Multi-touch: Evenly Weighted
Gives equal weight to every marketing touch point, regardless of the role that it played in the sales cycle.
Best for: Understanding the value of all the channels you’re using.
Attributes a high value to the first and last touch and spreads the rest of the value across the actions in between.
Best for: Evaluating best-performing channels.
Similar to U-shaped, however the W-shaped attribution assignes a higher value to the first click.
Best for: Analyzing your standardized process for lead generation.
Attributes the value across all channels but assumes that interactions closer to the sale are increasingly more valuable.
Best for: Understanding which channels have the greatest impact in a long sale cycle.
Armed with insights from these kinds of models, your organization can begin to realize other significant business benefits.
Where to Find Your Best Customers
Better understand your customer lifetime value or LTV, so you can identify the most profitable customer segments.
Improve Your Value Proposition
Determine which components of your value propositions are resonating with their ideal customers, and which are not.
Developing Better Marketing Plans
Now that you understand some basic marketing models and how they can help you illustrate the impact of marketing on the business, there are few general rules to keep in mind:
- Remain flexible. Build testing into your analysis and be willing to optimize or change a model when it makes sense.
- Keep the questions you’re trying to answer simple but important to the business. What is most important to business outcomes?
- Pay close attention to the quality of your leads. When do they become paying customers?
- Choose models based on your campaign objectives. A first-touch model may work best for a branding campaign whereas a time-decay model is better for a limited-time promotion.
Looking to start powering your ROI with marketing models? Connect with us to learn how Lityx can partner with you to help you leverage your data and advanced analytics to make faster, smarter business decisions.
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