Marketing ROI in B-to-B: Why Is It So Hard, and What Can We Do About It?
The other day, I had the pleasure of discussing the challenges of marketing ROI with Jim Obermayer, CEO and executive director of the Sales Lead Management Association, on his Internet radio show. Our conversation got me thinking: Why is the Holy Grail of marketing ROI so tough to achieve in business markets? And what can we do about it?
The "why" part is pretty clear: Business buying cycles tend to be long, and involve multiple parties at either end. Marketers produce campaigns to generate an inquiry, and then qualify that interest with a series of outbound communications, and finally pass the qualified lead to a sales rep for follow up. From that point, it can take more than a year to close, and involve a slew of people on the customer side, from purchasing agents, to technical specifiers, to decision-makers.
The sales process is also complex, involving not only the face-to-face account rep, but sales engineers, inside sales people, and others who help get all the buyers' questions answered, negotiate the terms, deliver, install and trouble-shoot the product, and whatever else needs to be done to satisfy the customer's needs.
So, consider the difficulty of establishing the numbers that go into an ROI calculation in this kind of situation. Just to put a definition behind the concept: ROI, meaning return on investment, subtracts the marketing expense from the revenue generated, and then divides by the expense, resulting in a percentage that shows how much net return was produced by the investment.
But in this lengthy, multi-party, multi-touch selling situation, the "investment" part can be pretty tough to get at. Frankly, it's a bit of a cost accounting nightmare, assigning an expense number to each sales and marketing touch that resulted in a particular closed deal. This brings up issues of variable versus fixed costs, marketing touch attribution—the list goes on and on.