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Measuring your ROI

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As far as Ron Helgeson, VP-corporate communications at Sopheon in Minneapolis, sees it, marketing has one main question to answer: “What’s the point?”

In other words, why are you spending money and why are you spending it in any particular way?

To answer these questions, Helgeson has developed a sophisticated set of ROI measurements at Sopheon, a software provider that offers automated product life cycle systems to technology companies. Its sales cycle averages about nine months from lead generation to signing a contract.

The company started its ROI program with fairly traditional metrics—click-throughs, webinar sign-ups, landing page hits, appointments sets—but about four years ago, it transitioned into a higher-level ROI operation.

“Now we track leads through the life cycle,” Helgeson said. “We measure qualified leads by their source, their region, volume per region, the speed of aging, movement through the sales cycle and other metrics.”

These metrics are all linked to 10 stages in Sopheon’s sales process. This way the company can see exactly where the leads are coming from, how old they are, where they are in the process, which account executive is handling them and where leads typically fall out.

“One of the reasons we do this is it provides insight into where we should concentrate our resources,” Helgeson said. “For example, conferences have proven to be less productive for us, so we dramatically reduced our conference schedule.”

According to marketing experts with KC Associates, which helped Sopheon develop its system, a few things are required to develop this kind of robust ROI program. First among them, said Kirsten Chapman, principal at KC Associates, Minneapolis, is a good CRM system.

“We’re always telling people to integrate their website into CRM,” Chapman said. “You can build a lot of good things with CRM.”

It’s also important, Helgeson said, to use some restraint when it comes to ROI.

“Don’t try to measure everything you can measure,” he said. “Select metrics that connect to the business objective and then measure them consistently over time.”

With any ROI program, there’s also a temptation to overemphasize direct marketing at the expense of brand-awareness activities. Social media, public relations and advertising all build up the brand and might yield qualified leads; but it’s nearly impossible to measure the true effectiveness of these activities.

“One of the things we look at when we do Web analytics is to look at organic, unpaid traffic, versus paid traffic from purchased keywords,” said Tom Pick, an online marketing executive at KC Associates. “We then split this traffic into branded versus nonbranded searches. Nonbranded searches are due totally to SEO; but branded searches, when they’re looking specifically for your company, have nothing to do with SEO. They have to do with everything else you’re doing, like talks, PR and advertising. When companies slow down those activities, their branded search levels go down.”

Social media, in fact, may be the next great frontier for ROI. Companies are currently stampeding into social media, but there’s actually very little data to prove that a company’s Facebook or Twitter account is resulting in any sales—no matter how successful it might be.

“Nascent marketing channels are like this,” Helgeson said. “Sometimes you have to move before you fully understand them. If people are standing by the road and scratching their heads over intellectual arguments about social media, my personal view is that they’re missing the boat.”

Nevertheless, at Sopheon—which does have an active social media marketing component, “Our belief in the value of social media as a marketing tool is based on anecdotal evidence.”

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