Metrics and ROI: Challenges in Measuring Success in B2B and B2C Markets

ROI

If you're planning a marketing campaign, no matter B2B or B2C, keeping track of where a buyer came from can be extremely tricky, especially when you start diversifying your marketing channels to campaigns that don’t have a direct conversion.

Time-lag between marketing effort and return

Measuring the lag time associated with most marketing spending is another common challenge. If you spend $1 today, it might take three years for the marketing to "work" and for the consumer to make a purchase, especially with products, like cars, that are purchased less frequently.

Jill Avery, a senior lecturer at Harvard Business School share the same view. "It's often tough to link spend to purchase," Avery says. "Time lags can also complicate the MROI formula, which needs to be adjusted to account for the risks of a changing environment and the time value of money."

When it may take a few months or even years for people to purchase, LinkedIn research shows that Digital Marketers tend to measure the ROI of their marketing campaigns immediately. The reality is, the full return of a campaign cannot be accurately measured until a sale is closed or a product is bought.

For B2C campaigns, the exposure of a product at a given time might result from customers purchasing the same product after the promotion campaign.

For B2B programs, an organization might reply to the company after more than a year from the first outreach email.

However, LinkedIn's research shows the tendency to measure performance shortly after a marketing program's launch. • 77% of digital marketers measure return within the first month of their campaign. And within that group, over 52% of digital marketers knowingly had a three-month or more sales cycle. • Even more surprising, only 4% of digital marketers measure ROI over a six-month period or longer, which is the duration seen to be more in line with the length of a typical B2B sales cycle.

Mixing metrics

B2B - KPI vs. ROI

When digital marketers begin to think about ROI measurement, it can feel natural to gravitate towards commonly used marketing metrics, such as traffic and clicks. While these metrics might be more readily available, they aren't really measuring ROI. Instead, they are actually key performance indicators (KPIs), which should be primarily used to optimize.

These KPI metrics maybe, as the name implies, indicators of a potentially strong return on investment, but they fall short of measuring the true impact and value of one's advertising investment. KPIs allow marketers to assess their campaigns' short-term impact but likely do not tell the full story of the value a campaign (or campaigns) are driving.

Use cases for KPIs and ROI

KPI Image source - freepik

KPIs - Highlights what happens during a B2C campaign / B2B sales cycle. How KPIs should be used - Forward-looking predictors of end performance.

Examples of KPIs

  • Impressions
  • Clicks
  • Cost Per Clicks

ROI Image source - freepik

ROI - Highlights what happens at the end of a B2C campaign / B2B sales cycle. How ROI should be used - Backward-looking informer of future budget allocation decisions.

Examples of ROIs

  • Cost Per Lead
  • Final Sales
  • Average Value of Users

In their rush to prove impact, digital marketers are often leveraging the wrong metric itself. If a marketer with a lead generation objective claimed to use CPC (Cost-Per-Click) as their metric for measuring ROI, the problems are

  • The marketer is using KPIs and communicating it as if it were ROI. In this case, CPC is a KPI and does not show the impact of advertising dollars spent.

  • In this case, digital marketers would be better served to use CPL (Cost-Per-Lead) instead of CPC in order to measure Lead Generation success.

B2C - Brand Metrics vs. Sales Metrics

Both brand metrics and sales metrics can be considered ROI, but it isn't easy to estimate the impact of marketing spend on brand metrics. When it comes to the impact of branding effort on the long-term value of one of the company's most valuable assets, these tools are blind.

When it comes to measuring the performance of branding efforts, metrics provided across marketing channels fall short to do the job. They're also unable to show how shifts in brand metrics impact sales or the performance of other marketing efforts.

For example, when a social media brand awareness campaign generates 100,000 impressions and 80,000 reaches, what do they mean apart from getting more people to come across your brand and product? Does increasing impressions lead to an increase in sales? How do these metrics contribute to the link between long term branding effort and sales?

For many marketers that use a combination of traditional approaches, it just hasn't come together. And for those who are using online advertising solutions, it becomes very confusing.

Multiple Touches

Multiple touches make it difficult to measure effectiveness across different campaigns and channels.

It is common for marketers to diversify their marketing effort, from posting on social media, creating landing pages, sending emails, displaying ads on Youtube, etc. Multi-channel exposure makes it easy to encounter users in different platforms to reach the effective frequency required for users to purchase.

Studies have found that the amount of touches needed to engage a buyer with your product is known to be between 10 and 20.

However, multiple touchpoints come to multiple trackings, meaning probing the user journey from one channel to another is a difficult task, stopping marketers from seeing the full picture and accurately measuring which channel gives the best results.

Since it is believed that it takes 10 - 20 times for a person to hear a message before buying, it is difficult for marketers to know when a purchasing decision was made. They have to account for all marketing activities done as the reasons for sales, which might not necessarily be the case.

Messy Data

If data is incorrectly gathered and recorded, it can have increased effects on lead attribution and cost-per-lead and impact the ROI measurement.

As engaging customers in multi-touches is a growing trend, gathering information across platforms to create the big picture is crucial. However, some metrics are platform-specific, say the impression or reach mentioned in social media channels are not the same as the successful email sending rates.

It is easy to misunderstand the information a data point is giving and record the wrong metric since some platforms use similar terms for different metrics.

Gathering total impression, engagement, and consumer purchase out of multi-channels becomes a challenging task.

What marketers can do here is re-evaluate and audit each channel and ensure the right data is being gathered and the appropriate systems are in place for the accurate recording and storing of data.

Miscommunication between departments

Whether marketers rely on the sales team to get figures or use CRM platforms to track leads and results in the sales funnel, ROI measurement is much easier if the sales and marketing channels are combined or streamlined.

This is especially the case in a B2B market, where B2B marketers were unable to track activity between specific buyer stages, which is key when running a successful warm lead nurture program. This leads to a little understanding of the B2B marketer on what action can be taken to facilitate the sales team.

When looking to invest in future marketing campaigns, marketers need as much information as possible about the "return" on their previous investments, some of which can only come from sales.

Even though you can measure the ROI – this gives little information about lead quality and brand perception.

This is where sales need to be involved in the discussion. When marketers measure ROI for a campaign, open up the channels and ask the sales team for their opinion – were the leads they spoke to well informed and keen about the product? Did they qualify quickly? Would they support marketers running the campaign?

Therefore, cross-department communication is crucial for B2B marketing success.

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Rebecca Yu

Rebecca is a writer, blogger, and educator. She writes about mass media, lifestyle, creativity and any topics that inspire new ideas and actions.

5 min read

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