Measuring the value of marketing activities is one of the most challenging issues facing marketing departments today. While there's been a lot of talk recently about marketing performance dashboards that try to measure a department's entire marketing mix, the reality is that many CMOs don't have the stability, buy-in or infrastructure to undertake such long-term efforts. Identifying the right performance indicators and metrics is hard. Pulling together the data from the right sources is harder; and getting internal stakeholders within a company to agree on what to measure and what it means is almost impossible. And with each executive turnover, you often have to start from scratch—which may explain why many marketing departments don't even bother.
So when we—a marketing executive, a sales ops guy and a market researcher—tried to tackle this challenge, we decided on a few guidelines:
First, we measure something that does not fluctuate or change with every executive turnover or business reorganization (in research speak, it has longevity and consistency over time).
Second, we measure something that matters to both marketing and sales leaders, ideally something that constitutes a big part of the marketing mix (in dollars).
Third, we measure a narrow subset of things, rather than trying to create the mother of all dashboards.
Finally, we use existing data from a trusted source that is broadly available and agreed upon.
What did we focus on? Flagship customer events. The type of event that tends to eat up the largest single chunk of many b-to-b marketing budgets. What did we measure? Well, since traditional "leads" have very little believable value with sales or business units, we measured tangible improvements in the sales opportunity pipeline:
- Average win rate,
- Average days in the sales cycle,
- Average deal size, and
- Average number of opportunities created after the event.
For our model, we needed to measure data in a way that both isolated the event as a measurable item yet was relevant to sales leaders. We found that we were able to do this using SalesForce.com opportunity data. To gauge the effects of attending the event, we created discrete, measurably differentiated buckets of customers (sorry, but not giving away the secret sauce) and tracked each group over the duration of the average sales cycle, across the same flagship event over three years and against a control group of randomly selected accounts.
We focused our analysis on Deltek Inc.'s annual Insight customer event, which draws more than 3,000 customers and has been running consistently for five years. It accounts for half of annual marketing spending. It's where products are launched, strategic decisions are announced and key customers come to buy. It matters to everyone. But how did it impact the bottom line?
We found that the event significantly increased the average deal size, which doubled if the customer attended the event versus those that did not. We found that the win rate increased from 13% to 24% if a customer or prospect attended the event versus those that did not. We also found that companies attending this event were more than twice as likely to have a new sales opportunity created against them in the 90 days post-event.
As with most things in life and marketing, our analysis has its pros and cons. The key benefit is that with this methodology, you do not need sales to tell you what happened or rely on anecdotal information to prove marketing success and impact on bottom-line results. This approach allows you to isolate an event as a variable and show how it influences existing pipeline and new-opportunity creation.
The downside to this is that it requires robust data sets and a trusted data source. It can be extended to smaller events, but will likely yield more directional data as each individual event's sample size will be smaller and so will likely have higher variability.
There are numerous other business benefits associated with flagship events—from branding through gauging repeat attendance to spot loyalists—none of which is explicitly measured in this analysis. Our goal here was not to boil the ocean, but rather to take on the single largest marketing ticket and tell a compelling business story around its impact. We wanted to show financial value and move away from contentious categories like "leads."
What did we learn? Whether you follow this kind of methodology or chose to do something else, we recommend focusing your measurement on one long-term marketing effort that takes up a big portion of the budget and isolate its effect using existing, broadly accepted data. Then speak to sales and the business in their terms, and knock their socks off with your event's impact on the bottom line.
Yariv Alpher is chief research and customer insights officer at Lodestar; Kirsten Edmondson Wolfe is VP-marketing of the GovCon Business Unit at Deltek Inc.; and Robb Harrington is senior director-sales operations at Deltek Inc.