Projecting metrics for your campaign? Avoid magical thinking.
Justification is the name of the game when it comes to determining budget for a demand generation or lead nurture program using an integrated multi-channel contact strategy. The CFO wants to know what the ROI will be before funds are released and in many cases wants metrics by each of the channel components.
But many marketers harm themselves by engaging in “magical thinking” i.e. they come up with unrealistic metrics to justify the investment.
A variety of factors ranging from lack of response history to changing purchasing behavior cause estimates on response and conversion to become suspect. Nevertheless, proforma metrics need to be calculated.
So what can one do? Well, the first choice is to test and learn.
Pilot programs and rapid prototyping can be built for a fraction of the cost that will provide statistically reliable data that can be used to build a realistic view of the ROI. However, real world issues such as “time to market” and/or impending competitive threats may not allow enough bandwidth to test.
As a fallback marketers rely on secondary sources of information such as industry norms, previous campaigns or previous tests done for the product or service. Using a combination of these results a marketer can then create a range of data points (high, middle and low) and apply a weighting factor to each point in the range.
Sometimes the marketer is handed a pre-determined budget and sales goal and asked to “work within it.” In this situation, the task is to develop a strategy and supporting tactics that fit. The trap, however, is that unrealistic response and conversion metrics will be built that map to the predetermined ROI. This often leads to results that fall short of management’s expectations and the marketing team is then held to task. The answer under these conditions is to push back (as hard as it may be) at the outset and look at longer time horizon that allows for a break-even point between revenue and cost.
Regardless of the conditions it is important to avoid “magical thinking’ when it comes to ROI. The key to success is being realistic, educated and transparent when it comes to projecting results.