Marketers still struggling to measure ROI

Despite increased focus on the metric, many are stumbling to use the right data and to align with finance and sales, finds Allocadia.

After a year-and-a-half of pandemic life, marketing leaders are facing more pressure to demonstrate a return on their investments. But many still lack the necessary data and the alignment from other departments to measure ROI effectively, finds a new study by Vancouver performance management company Allocadia.

The survey of more than 250 marketing execs, directors and managers, conducted by market research firm Propeller Insights, found that 84% of marketing leaders say marketing has grown in importance for their organization over the last year. Only 11% say there has been no significant change during a disruptive period that has included varying states of lockdown and shifts in marketing strategy.

And annual growth is far and away the leading metric through which marketers are accessing the impact of their activities. Sixty-six percent of respondents say it’s the metric they use, followed by campaign results (45%) and relative market share (44%).

As Allocadia notes, annual growth consists of a number of measurements that include new customer revenue, quarterly performance and ROI. Overall, its survey found that 96% of companies use ROI to assess the effectiveness of marketing, with just over 36% of marketing leaders claiming it as the ultimate metric.

But a significant number of respondents (47%) report not being able to measure ROI at all. And even among those who can, a significant portion – 61% of all marketers – don’t use that information in making their decisions, defending their marketing spend or asking for bigger budgets, because they are not confident in their own data, according to the research.

In order of importance to marketers, those data sets include program influence on revenue and sales (67%), spend against strategic plans (54%), investment dollars (47%), spend against company objectives (34%) and program influence on the pipeline (18%).

Even then, confidently calculating ROI is only “half the battle,” notes Allocadia.

Another significant challenge for marketers is aligning with other departments on the meaning of ROI, with 43% of respondents reporting they do not use the same definitions or metrics as the sales and finance departments.

Only 49% of marketers claim to already be “completely aligned” with the finance and sales departments on their data sets, goals, strategies and tools for calculating ROI. Another 48% say they plan to get aligned, while 3% say there is simply no alignment.

In order to overcome those challenges, especially as they work to measure previously untested strategies in the wake of COVID, the firm says marketers should start by assessing their department’s capability to measure ROI and determining where roadblocks exist.