Return on Marketing Investment: A Professional Services Primer
Professional services marketing used to be a giant black hole — a lot of money got sucked in and no light ever escaped. Sometimes things went well, sometimes not. But your ability to quantify the return on marketing investment was severely limited. When marketers in the professional services discussed return on investment, they relied on broad, bottom-line metrics like revenues or imprecise metrics such as magazine circulation to estimate advertising exposure. There was so much distance between a given marketing strategy and its results that teasing out a correlation between cause and effect was difficult, if not impossible.
Fortunately, all that has changed. Marketing is more quantifiable than ever. Sure, there is still uncertainty. But by combining highly measurable marketing techniques with statistical analysis, professional services firms are able to improve — often dramatically — their ability to attract and persuade their audiences. Today, I’d like to explore some ways this is happening so you can adjust your marketing approach to be more measurable and effective.
What is Return on Marketing Investment, Anyway?
First, let’s start with a definition. Return on marketing investment — or ROMI — is a measure of a firm’s marketing efficiency. It can be expressed neatly as a formula:
Revenue from Marketing / Cost of Marketing
Deciding what to include in those numbers, however, can be tricky. For instance, some marketing investments play out quickly, while others take months or years to bear fruit. And it’s not always clear which revenues were generated specifically due to marketing. In fact, there are many different ways to calculate ROMI — and just as many opinions on the best way to do it. A simple Google search will uncover a variety of calculators and approaches.
We don’t have room here to explore all these options or to delve into their accounting complexities. Just keep in mind that the method you choose will depend largely on what you want to measure, and at what scale. Do you want to evaluate your marketing performance at the individual campaign level, at a macro level, or both?
From Dark Art to Science
While figuring out how to calculate your return on marketing investment can be confusing, it’s a challenge you can overcome once you identify your goals. It wasn’t that long ago that calculating marketing ROI was a guessing game. As John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Before the rise of online business technologies, the same could have been said about virtually any aspect of marketing.
Today, marketing is more scientific than ever before. With the advent of online marketing, we at last have real numbers to work with, and we can see — often in real time — how people respond to a marketing campaign. If anything, marketers may become overwhelmed by the masses of data they are generating. However, having too much data is a better problem than having too little. You just need to pick which data to use.
What You Can Measure, and What You Can’t
Traditional marketing techniques such as sponsorships, print advertising, public speaking and networking are as opaque as ever. Alas, we haven’t developed sophisticated new tools to make these tactics any more transparent or effective. Which is not to say they don’t have a place in your marketing program. In fact, our research shows that the most successful firms rely on a mix of traditional and modern online techniques to reach their audiences.
But firms are increasingly turning to online tools — usually as part of a content marketing strategy — for several reasons:
- They are fast
- They are easy to measure
- They are (mostly) accurate
- It’s often possible to test different configurations
- They allow you to see the implications of changes you make to your strategy
- They leverage technologies that everybody is using
So what online tools are we talking about? And what can you measure with them? In our ongoing High Growth Study, we identify the online tools that the best performing firms invest in to reach their target audiences:
- Email marketing
- Downloadable educational content
- Online advertising
- Webinars and other online educational events
Each of these tools provides a different set of levers you can use to persuade your audience that your firm is worth hiring. And each offers different ways to measure the response.
Email marketing — Perhaps the most effective way to reach any audience, email marketing is fast and cheap. It’s a terrific vehicle to keep your prospects engaged and deliver offers. You can measure how many people opened your email, clicked links, unsubscribed, bounced (that is, can’t accept your email), and shared it. You can also measure how quickly your email list is growing. If you segment your list, you can also determine how different audiences are responding to your outreach.
Downloadable educational content — When people download your most valuable educational content, especially when it’s behind a registration form, they are usually very engaged. Many firms track these downloads as conversions — a significant action the prospect has taken that moves them closer to a sale. Educational content serves a larger purpose, too. Taken as a whole, your collection of content demonstrates your expertise and positions you as an authority in your domain area. So people who come back again and again to consume your content are very likely to perceive your firm as a leader in solving those problems. And when these readers decide to hire a firm to do the work for them (most are not going to do it themselves), your firm will be at the top of their list. You can track the number of downloads, as well as keep an eye on what types of content are generating the most interest. Many firms also track how many downloads on average it takes to produce a new opportunity.
Blogging — Blogs are a key component of content marketing. They provide a steady supply of fresh content, which search engines find irresistible. If you are going to implement an SEO strategy, this is the place to do it. Here’s how it works:
1) You select a keyword relevant to your business.
2) You write a blog post around that keyword.
3) Google indexes the page and ranks it (note that there is more than blind luck involved in achieving a high search rank).
4) A person interested in the topic searches on the keyword (or a similar keyword), finds your post, reads it, loves it, and either reads more posts on your blog or exchanges their email address for a valuable piece of content.
You now have a loyal follower who, with time, could become a new client. On blogs, you can track a wide variety of metrics, including number of visits, page views, time spent on the page, and bounce rate (visitors who leave your site after visiting the page).
Online advertising — Online ads can be used to build brand awareness or promote a specific product or service. These ads come in two distinct flavors: 1) pay-per-click ads, like the ones you see on a Google search results page; and 2) display ads, like the banner ads you see at the tops and sidebars of many commercial websites. Unlike its print equivalent, online advertising is highly measurable. You can measure impressions (how many people looked at the page that it appeared on), clicks, and conversions (how many people who clicked to the landing page followed the call to action, such as filling out a form, downloading something, etc.).
Website — In modern professional services marketing, your website is much more than an online brochure — it’s the hub of your marketing program. It houses your valuable content and your blog, it delivers relevant offers to visitors who enter the site on different pages and it positions your firm against similar competitors. There are a vast number of metrics you can track on your website. Common ones include overall traffic, most visited pages, most visited landing pages, time on site, bounce rate and conversions (if you are using Google Analytics, you will need to set them up).
Webinars and online education events — Webinars and other online events are great places to capture an audience for an hour or so and demonstrate your expertise. To manage multiple simultaneous audience members, you will need a dedicated tool, like GoToWebinar or WebinarJam. You can measure a number of useful metrics, such as attendees, attendance rate (how many actually attended of those who signed up) and drop-off rate.
How to Use Your Knowledge for Good
Okay, collecting a bunch of data is all well and good. But it’s what you do with it that makes all the difference. A big part of data analysis is deciding what to ignore. In other words, what questions do you want to answer? And what data will help you answer them?
If your goal is to determine your return on marketing investment, you’ll want to figure out which metrics you believe contribute to revenue generation — and which are just noise. If you are pursuing a content marketing program, for instance, conversions such as downloads and form fills are highly relevant. And chances are, there is some correlation between web traffic and conversions. But other metrics are less clear. Is time on site an important indicator of engagement or a red herring? Does a high bounce rate indicate lack of interest, or that a page is so relevant it answers visitors’ questions completely (time on page may help answer this).
As you can see, there is a bit of art involved in this science. But as you gain experience, you will realize that a handful of metrics are particularly revealing. A big advantage of having access to data — an advantage that marketers could only dream of — is that you can experiment to discover which elements of your campaigns work and which don’t.
A common way to do this is with A/B testing software. This can be used to test virtually any element on an online page or email that can be changed: headlines, body text, images, button text, colors and more. You can develop a hypothesis and use the software to deliver the changes to a random sample of readers. You can set up a particular web page/offer or email promotion and monitor it over a period of time, then you can make a change and monitor which version performs better. You can test numerous variations. In this way, your marketing becomes better and better over time. And it’s all made possible by modern online marketing tools.
Today, monitoring your return on marketing investment is not only possible, it serves as the foundation for creating even greater returns over time. To take advantage of this opportunity, however, you need to embrace modern online tools and make them an important part of your overall marketing program.
If traditional techniques, such as face-to-face networking and attending trade shows, are working for you, by all means continue to use them. Remember, high-growth firms use a judicious mix of online and offline tactics. But start building a robust online toolkit to bring a little science — and confidence — into your marketing. It’s a great feeling.
- Download Hinge’s Content Marketing Guide for Professional Services Firms for more tips on creating content that builds credibility and demonstrates expertise.
- Discover what motivates today’s professional services buyers. Download and read the How Buyers Buy Professional Services research report.
- Grab a copy of our full-length book, Online Marketing for Professional Services, and learn what techniques that generate more leads and increase awareness of your firm.
How Hinge Can Help:
Hinge helps firms like yours become more visible and compete at a higher level. We offer research services that uncover important changes and opportunities in your marketplace. Our Visible Firm® program provides critical insights, training and marketing implementation services to help your firm become a differentiated, high-visibility top performer.
- A 10 Step Brand Development Strategy for Your Professional Services Firm
- Rebranding Strategies: A Step-By-Step Approach for Professional Services
- Elements of a Successful Brand 4: Brand Promise
- The Best Converting Landing Pages for B2B
- The Top 5 Business Challenges for Accounting & Financial Services Firms
- Find Your Differentiator: 21 Ways to Gain a Competitive Advantage for Your Firm
- Elements of a Successful Brand 1: Brand Positioning
- Top 7 Referral Marketing Ideas for Professional Services Firms