Spencer Trask Ventures is in the business of providing a return on investment by providing awesome opportunities based on brilliant ideas. Indeed Mr. Spencer Trask was the first investor for Thomas Edison, and we all know how that changed the world for the better.
Yet when it came to its own marketing, the Greenwich CT-based private equity company didn’t measure or monitor its own marketing return on investment. It randomly spent money on various sales and marketing activities, with little proof of return
The company isn’t alone. According to a 2013 survey by Teradata, 75 percent of marketers trying to calculate ROI, encounter obstacles. Spencer Trask knew that to leverage best practices for strategic marketing decisions it needed to measure its marketing ROI. It needed to shift from best guess to best know. But it was marketing on a budget, constrained by limited resources.
Then Spencer Trask found a solution: it turned to us, an outside software company with proven model and expertise. For a modest investment, the company was for the first time able to prove which marketing efforts were effective and which were not.
The company automated and aggregated a combination of data sources such as social, search, content engagement, digital, email marketing, customer segmentation, and sales people’s behavior. As a result, Spencer Trask enjoyed improvements such as an astonishing 66% open rate on email – up from open rates as low as 1.5% – and a nearly 50% response rate.
If you’re not already measuring marketing ROI, now is the time. It enables you to make better business decisions, more effectively allocate spending, and maximize profit during the planning stages as well as during execution. It also helps you better engage your customers, by maximizing your marketing effectiveness. Your competitors are doing it, you need to also.
If you are starting out, here are 5 tips to measure your marketing ROI, as efficiently as possible:
1. Seek Outside Help
Spencer Trask learned that the best way to measure and monitor marketing ROI is by turning to outside experts and proven technology solutions. This outsourcing trend is similar to the evolution in customer relationship management in the past decade. Whereas previously businesses struggled with relational databases and software integration on premise, they have since turned in droves to popular SaaS-based solutions like salesforce.com.
2. Invest Resources Effectively
Your choice is to either build an in-house capability or “rent” software. If you build, plan for hiring an internal team, train the team for about 5 different skill marketing technology sets, and then build and prove the models. If you have about 18-24 months and a $1M+ to spare, then go for it. Or you can turn to SaaS software solutions instantaneously leveraging best practices across all categories, with less money and headaches.
3. Choose Budget Friendly
Software solutions for measuring marketing ROI are available on a monthly subscription basis. You can enjoy the flexibility of recognizing variable costs, compared with the high fixed cost of labor. By freeing up additional working capital, you can apply the difference to driving demand, spend more time understanding consumer buying behaviors and adjust campaign deployments in real-time.
4. Data Efficiency
Data volume and variety is continuing to grow and it’s not going to get any easier to manage. The key is to have less people touching it, and have systems take on the heavy lift of automating the collection, organization, hygiene and mapping. This also helps you find out faster where your current data gaps lie today, and better exploiting data that’s currently underutilized.
5. Make Decisions Efficiently
Looking ahead, the most effective way to track ROI is to look at the whole enterprise from a top-down view, in addition to looking at specific channels and campaigns. But with more than 60 different marketing channels today, and myriad cross-channel impacts, and varied customer buying habits, it’s more revealing to look the benefit of marketing as a whole. This makes it easier to get the answers that drive the smartest decision making.
At Spencer Trask, the company is now practicing what it preaches: maximizing return on investment, in this case its marketing investment. The most successful marketers of tomorrow will be those who can accurately and efficiently track and boost their marketing ROI. For those just starting out, get started today and become more advanced over time.