In our work, we hear a common refrain from nearly every client: they need to justify their marketing spend to stakeholders. Inevitably, we also find our clients’ marketing teams aren’t equipped with the tools, strategies, and mindset to holistically capture return on marketing investment (ROMI). After all, that’s why they’ve come to Fjuri.
To these clients, we advise that justifying spend by calculating ROMI begins with accounting for all value created across a complex set of activities, and ends with full transparency around spend. To ensure that marketing is accurately measuring its impact, there must be a customer-focused data set that tracks each interaction between the brand and the potential or current customer.
That’s easier said than done—relying on a simplified ROMI calculation is easier, faster, and less expensive, while committing to achieving a holistic ROMI calculation requires a significant investment of time, focus, and funds. So why should your organization invest in frameworks that enable the ability to holistically calculate ROMI?
ROMI: Simplified vs. Holistic
Let’s explore the pros and cons of these two types of ROMI. As mentioned above, a simplified ROMI approach is quicker, less complex, and costs less. It’s a simple calculation of revenue brought in by marketing divided by marketing spend. In exchange, you can only measure the efficiency of all marketing activities explicitly tied to spend. This limited calculus leaves out critical data for how marketing efforts indirectly influenced the buying decision: brand building, lead generation, and other value created. It also doesn’t provide granularity within spend.
Here at Fjuri, we believe that this simplified ROMI approach is fundamentally flawed because it fails to capture all the incremental value that marketing creates. Specifically, it misses the brand awareness, assistance to sales, and long-term impact that the totality of marketing has on the company.
This is why we recommend to our clients the adoption of a holistic ROMI approach: it measures the spend efficiencies of all marketing activities throughout the buyer and customer funnel. Each element of a marketing team’s efforts—an ad on a bench, a targeted display ad, a technical whitepaper, promoting a product webinar—is meticulously tracked and measured against established goals with specific KPIs to track performance.
In contrast to the blunt approach to simplified ROMI calculation, a holistic calculation can identify incremental value created by marketing teams, helping to more directly attribute value to marketing efforts. You can also provide greater granularity into spend, driving spend efficiency.
Holistic ROMI at a glance
We’ve helped many companies convert to holistic ROMI reporting. How do you get to holistic ROMI, and what drives these reports? In a word, analytics—analytics that encompass every touchpoint in the lead and sales cycle. The Fjuri analytics blueprint features three key components for holistically calculating ROMI. Modern marketing analytics teams need all of these techniques to comprehensively measure marketing's incremental ROI in the short, medium, and long term.
Analytics strategy: a measurement framework that organizes activities by strategic purpose to streamline decision making.
Data integration: Full-funnel data sets to ensure marketing touchpoints align with incremental tactics.
Data delivery: Multiple analysis techniques to recognize complete value of marketing programs and optimize spend.
Data for these three pillars are aggregated by task-oriented platforms: Marketo and Salesforce for marketing automation; a CRM system; Google Analytics and Adobe Analytics for web tracking. Then our expert consultants bring their expertise to bear on the data to help you identify, understand, and act on these granular insights to increase marketing efficiency and reach.
Of course, there will be costs associated with switching to this more complex ROMI calculus. It requires investment in technology and potentially in infrastructure as well. It takes time to stand up the new systems. Adopting holistic ROMI can also require an expansion in headcount—ideally, a dedicated marketing analytics team or a marketing mix modeling team will be created, but it’s possible to pivot an existing team by automating processes.
Credit where credit is due
One big benefit to this holistic approach is that it enables marketing leaders to definitively show where marketing has delivered impact across the entire funnel and justify spend. It can also help marketing and sales teams work better together—these two factions can often operate independently, which can lead to contradictory initiatives and goals. Implementing a comprehensive ROMI calculus can get these two departments on the same page and deliver clearer insight into who deserves credit for influencing the lead conversion process through every step of the customer journey.
It’s very helpful for marketing teams to justify spend when they have the ability to track every touchpoint with a lead before it’s passed to sales. For example, a potential lead could interact with a marketing ad, get educated on a product—and then directly reach out directly to sales to request a demo. Ordinarily sales would get the credit for the lead, when in reality it counts as a marketing-contributed lead. Our holistic method can help solve for that oversight by enabling marketing teams to show what happened, when it happened, and on what channel, from the first time a lead interacted with their brand through subsequent touchpoints and to conversion.
Holistic ROMI: all in, or step-by-step?
If it’s not clear by now, switching to this level of calculus is a game changer—another way to put it is “disruptive.” As mentioned above, it takes a significant, ongoing commitment in terms of cost, time, and attention that can pay off in ongoing benefit to marketing teams and the entire organization. But not every company has the resources to commit to this model 100 percent right off the bat.
We see two primary factors that influence how to switch to holistic ROMI: one is the size of the company, which impacts the budget-and-headcount considerations. Then there’s also the stakeholders’ appetite for such a change and other potential institutional barriers to overcome. You can overcome barriers to entry by starting with a test-and-learn path—first, identify what works by using scientific methodology and testing hypotheses. Once that’s established and delivering solid, data-driven insights, continue into a more data-intensive attribution model that delivers a wider—and at the same time, more granular—picture of the landscape. Then level up to predictive modeling, and you’ve achieved holistic ROMI.
The important thing is to not be put off by the commitment that holistic ROMI requires. The payoff for marketers is huge: a powerful framework that delivers more efficient marketing and trackable results that establish marketing as a core driver of your business’s success.