Track the Journey, Report the Destination

The difference between B2B marketing KPIs and ROI – what to track and when

As a B2B marketer, we’ve all been in those meetings when we’re asked what the ROI is on marketing spend and activity – and quite often we’re asked to forecast the ROI before budget is approved.

It’s a challenge every marketer has faced at some point – what to measure, when and why. And how to then use that to request the vital budget you need.

There’s a really interesting read from LinkedIn about this very topic, and it inspired me to share some of the key snippets, first of all starting by unpicking what we mean by ROI, or are we getting confused with KPIs?

ROI Vs KPIs

Quite often ROI and KPIs are mixed up and mean the same thing for many. But they’re quite different.

As Thomas O’Regan of Madison Logic said in this article, ROI is a destination. Measurement is a journey. But what does this mean?

It means use KPIs to track the journey, show progress along the way and validate key milestones. ROI, on the other hand, highlights what has happened at the very end of the journey.

Think as LinkedIn summarise in their ROI report, KPIs are like chapters, ROI is what’s happened after the entire story.

Let’s look at some practical examples of ROI Vs KPIs

According to the Long and Short of ROI, ROI includes activity such as:

• Marketing-attributed bookings
• Close/won deals
• Average deal size
• Cost per customer acquisition
• Win rate
• Return on ad spend

Where-as KPIs include a measure of the different activities we undertake before deals convert, including:

• Impressions and reach
• Social engagement, followers, web visitors
• Leads, conversions, cost per lead, cost per click

How long does it take to measure marketing ROI?

As an experienced marketer I like to think I offer tremendous value to the businesses I work with. But like many marketers highlighting this impact and showing the true ROI on activity is a real challenge, for many reasons.

According to LinkedIn’s research they found four problems with how marketers are trying to report on ROI:

1. We’re measuring ROI too quickly.
2. When we do measure ROI quickly, we’re not really measuring ROI (but KPIs).
3. We struggle to measure ROI due to internal pressures (i.e., unrealistic timescale expectations on when marketing leads will convert to closed/won).
4. All of which leads to lower confidence and less motivation to share ROI, which could be limiting future budget allocations.

We all want to show the impact we have but we also have to be realistic about how long this will take. And it takes a long time sometimes – and not an easy answer to offer when the business wants quick results!

Taking into account the average sales cycle is 6 month+, why are 77% of marketers trying to report within one month of the campaign? Only 4% of those surveyed by LinkedIn measure ROI over 6 months or more. Which is pretty crazy when you think about it! So why is this?

One reason is because we’re under so much pressure to report ROI to justify spend and future projects. In fact, 58% of marketers surveyed gave this very reason. And I’ve certainly felt that pressure too.

The other issue is we measure the wrong things, as we touched on above. Remember: ROI, not KPIs (although KPIs are still incredibly important for tracking marketing objectives, so you still have to measure that too – it’s just not ROI).

Moving on to internal pressures, we all feel this. And we’re not alone – did you know that 46% of marketers are having monthly budget conversations? This is a real issue that needs to change. It creates unnecessary pressure, puts the emphasis on quick win tactics and not enough on long term growth and investment.

In Conclusion,

We need to embrace the ‘long-term measurement mindset’. And crucially remember that there is more to marketing success than KPIs and ROI. Businesses also need to consider measuring customer lifetime value, customer satisfaction and marketing productivity.

For more details on the LinkedIn ROI report, you can access the full research report here.

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