How ROI can help you choose your martech provider
The choice of the right marketing technology provider for each business depends on many factors. Return on investment (ROI) is one of the most important ones.
The rise of marketing technology is bringing up the challenge of finding the best provider to meet your business goals. One of the most popular factors that affect a martech investment is the measurement of its ROI.
Every purchasing decision from marketers has to be justified. The return on investment can tell whether the technology can meet their expectations, bringing them closer to their goals.
As more marketing technology vendors show up though, the choice becomes harder on picking the right solution. As the criteria are subjective, ROI becomes even more important for each company.
According to the recent Marketing Technology ROI survey by Ascend2, the increase of marketing ROI is the first objective for a marketing technology strategy.
69% of the respondents view ROI as their primary objective, while 48% focus on marketing efficiency. This means that it becomes imperative for a marketing technology solution to be able to help a company with the set goals, improving the way they are measured and achieved.
Return on investment seems to be a key factor when searching for a new marketing technology. In fact, its evaluation tends to be among the biggest challenges for marketers.
It is estimated that 44% of marketers believe that forecasting ROI is one of the biggest challenges when acquiring new marketing technology. This can be interpreted in two ways:
Another common question when looking for a new marketing technology is, “when should I expect a return on investment?”
Every business has different ways to measure the ROI, but they all set their own timeframe on when to expect the first results from the implementation of technology.
According to Ascend2’s survey, 39% of marketers expect to achieve ROI in 4 to 6 months. Moreover, 29% wait longer, aiming for 6 to 12 months.
Other marketers seem to be more impatient as they want to see a return on investment in less than 3 months. Only 7% of marketers believe that ROI is achieved in more than a year.
As with the evaluation of ROI, the timeframe is subjective. The timeline depends on the goals of each company, the marketing angle that they’ll use the technology for and also the resources they have for its implementation.
For example, it’s not unrealistic to expect ROI in less than 3 months as part of a well-prepared marketing team that already has a strategy and want to accelerate the key results.
On the other hand, if a small company is still at an early stage in updating their marketing strategy, their investment may require a longer period of time to see the results of it.
The challenge of measuring ROI in marketing technology starts from the confusion in trying to define it.
The return on investment may be different for each product and each company that uses it, but there is still a general definition of it.
In every investment, ROI is calculated by dividing the benefits with the cost. More specifically, marketers evaluate ROI in marketing technology by assessing the possible impact of the technology and its cost to achieve it.
For example, if a company is interested in buying a marketing technology focusing on analytics, this would be the initial thinking on evaluating ROI:
“We are looking for a martech solution that will enhance our analytics measurement and we’re examining our options and their possible ROI”
In this scenario, the Investment would involve:
The ideal Return would be:
In every case, the evaluation of ROI should involve realistic targets, while it can also include a stretch goal for additional calculations of increased impact.
When it comes to the functions that make ROI of martech easier, analytics and predictive modelling seem to come first. According to Ascend2’s survey, 50% of marketers place analytics and predictive modelling as the first feature that is most likely to increase their ROI. Data management comes second and marketing management is third.
This means that these functions have more chances to create a clear measurement for marketers, helping them decide on their priorities and their future goals.
The best way to evaluate ROI is to assess it with your existing marketing strategy. When you need to explore the ROI for a new purchase, you can ask if this meets your strategic goals. How will this investment make you meet your goals sooner?
As you start with the marketing strategy, it’s easier to interpret the actual ROI for each tool, as you align it with actual goals and metrics. This way it’s easier to understand how it can help you deliver an improved performance.
It might even be a good idea to involve the strategies of different levels, starting from the business strategy, heading to the marketing strategy and ending up narrowing down your perspective with a marketing technology strategy.
If you’re planning to invest in multiple martech vendors, then this suggestion can help you organise all your goals and how each platform can help you achieve them. This way the measurement of ROI becomes easier, while you’re not missing the focus of your bigger goals.
The assessment of martech ROI can be divided into four main steps:
There may be a broader attempt to evaluate ROI, but it still depends on each company’s goals and the priorities that go along with them.
As with every new technology, marketers are encouraged to explore the best way to benefit from a possible purchase, while assessing the cost and the team needs that are also required.
ROI tends to be one of the most important factors when considering a martech purchase and this means that we cannot ignore the benefits of a platform.
Just because martech is trending, doesn’t mean that we shouldn’t seek for ROI on each product. And this is the right time to start evaluating it.