Why is it so hard to measure ROI?
Return on investment or ROI in business is defined as:
We all know that right?
When we first start an engagement with a new prospect who has a webinar program in place and ask that question we get a lot of really interesting answers. Only a few of these match this definition. Instead, we see hear things like:
“We gauge success by the number of viewers”
“We measure ROI by the number of leads the webinar drives”
And my personal favourite.
“We don’t really measure ROI we just do them because we know we should”
If the equation is so simple why is the answer so hard? Well that is a complex question and has much to do with the general dynamic the Marketer lives in. The reason so many reframe the question of how they gauge success is because
more viewers = more leads = revenue
is logical and certainly better than stating that they don’t really measure ROI at all.
The challenges most of you face.
The Cost Equation
Measuring the cost of the program is challenge because a high percentage of your costs are wrapped up in people’s time. We undertook an exercise a few years back and tried to measure this cost in simple man hours (forget lack of productivity) and came up with a number of approximately $9,000.00 per webinar with platform being the smallest part of this cost. Even if you paid 10x what you pay right now for a webinar program people costs still make up the biggest part of the cost equation. For this exercise let’s say I know what I am talking about, index for inflation and say the cost of producing a webinar in most organizations is about $5,000.00.
The Profit Equation
This is so much harder to calculate. If you are like many marketers we encounter the biggest issue is visibility to the funnel downstream to determine the impact of your program. Sure you know your webinar generates leads or database growth but you don’t know how that impacts sales since you turn the “leads” over to the sales force.
So you hang your hat on metrics like viewers or leads but they are not the same thing are they?
There is a better way I assure you!
Factor 1: Net new records or true LEADS
Most companies put a value on digital marketing leads. This is generally a calculation that looks similar to:
Average deal size x percent of digital leads that close (eg. average deal = $10 000 per year.
You convert 0.5% of digital marketing leads to sales you are looking at a value of $50.00 so at our calculation this would mean that you need to drive 100 net new leads to your webinar to break even based on our cost equation of $5 000 per webinar.)
Not out of the question considering the average webinar in North America gets 213 viewers but once again if you are like me, a good number of your viewers come from your those already in your funnel so don’t qualify as a new lead. So getting 100 of those might seem ambitious without increasing that cost equation with a whack of spend on google/social ads.
Then again if your average deal size is 1M and your sales team closes 1% of digital leads well you can stop reading right now I guess!
Factor 2: Pipeline Growth
Since most webinars attract a diverse audience of net new leads, those already in the funnel and existing customers, a more accurate way to measure ROI than the above digital lead conversion is to measure impact on pipeline from all aspects of our audience.
If your digital lead conversion is 0.5% your CRM pipeline to deal conversion is generally considerably higher and since your webinars are attracting existing prospects and customers along with new leads you can apply the same marketing lead equation to pipeline growth following a webinar but it looks like this.
Dollar amount of pipeline growth added by new leads, prospects and existing customers who viewed the webinar within 15 days of viewing the webinar x percent of pipeline that converts to revenue. So if you added $100 000 in pipeline growth within 15 days of an event amd your pipeline conversion is 20 percent then your profit equation is $20,000.
Factor 3: Actual Revenue
This is the hardest part of the equation.
Marketing goes out and tracks them down, gets them interested but generally speaking in a B2B world sales gets the kill (the contract). Although I live in a world built around webinars I do understand that even getting them to sign up for a webinar likely took two to three marketing interactions. Then the sales rep needs to do his or her job and bring the deal in. So this equation is very challenging to actually break down. I have had a few customers create their own equations based on where the Webinar enters into the buyer’s journey but it differs drastically based on your program and your general process. In the end you really need to find a way to analyze your own data to find the causality required to get a real number. The problem as I mentioned at the top of this post is visibility down funnel.
The best way to get visibility down funnel? Integration! Read our post on the value of integrating your funnel into your marketing stack.
If integration is not in the cards download our Webinar ROI calculator.
Your Moment of ZEN
Webinar ROI is all about two things.
Reducing the time it takes to produce webinars and hence reducing your highest cost.
Increasing the measurable outcomes (which means measuring more than just who shows up!)
Now, how do you improve ROI? That my friends is a story for next week!