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he MarTech stack is quickly becoming complex—too complex. Let’s be honest: it’s not uncommon for us to get that uneasy feeling that one tool or another, one technology or another, isn’t necessarily delivering the impact we had hoped for beforehand. When a new physical product is launched, the return on investment (ROI) is easy to measure in most cases. You can clearly separate expenses and revenues without much effort. But how does that work with MarTech?
Before we dive into the depths of MarTech ROI, here’s a quick reminder of how ROI is calculated. A well-known formula is:
ROI = profit / total capital * 100
If, for example, you invest 50,000 euros in ads that ultimately earn you a profit of 10,000 euros, your ROI is 20 percent (10,000 / 50,000 * 100). So far, so simple and easy to understand. But what does it look like for marketing automation? For a CRM system? For chatbots? For an analytics tool?
In many companies, MarTech has now arrived and been embraced. After all, just under 30 percent of marketing leaders’ investments before the pandemic went into this area. In the middle of the pandemic, in 2022, it was still a good 26 percent. No wonder, then, that the topic of MarTech ROI is becoming more relevant.
A purposeful reflection on these investments is rather rare. Yet it’s something that more than one CEO or CFO is certainly itching to know: what, exactly, is the ROI of a tool, a piece of software, or the entire MarTech stack ? When many tools interact with each other, it becomes twice as difficult. But not impossible!
To measure the monetary success of your MarTech stack, four basic prerequisites must be met:
Know-how:
The MarTech market is growing rapidly. Many companies can’t keep up with staffing. There may be enough employees, but they’re often not trained or lack the necessary expertise. So, prerequisite one is having capable employees and the most important core competencies in-house. (Our tip: the guest article “This is how you become a MarTech expert in your B2B company – 10 tips I wish I’d known earlier”)
Structured data foundation:
Big Data is useless if it’s Messy Data—i.e., chaotic and unstructured. To be able to measure the ROI of your tools, you need a sound data structure that you actually work with—otherwise the result will be distorted.
Set clear KPIs:
Simply defining the growth of social media reach for a distribution tool or the number of leads for an email automation as a KPI is not enough. Without KPIs that comprehensively account for where your MarTech stack has both positive and negative effects, the numbers won’t add up.
Marketing attribution:
You should also know exactly at which point in the customer journey your customers are influenced, and how. This helps enormously when measuring MarTech ROI.
Do you have all the prerequisites in place? Then it’s time to get down to business. Let’s look at two approaches you can use to measure your MarTech ROI.
The more MarTech tools you use that interact with each other, the more complex it becomes to calculate ROI in detail. If you only use one or two solutions that function largely independently of one another, it’s possible to measure ROI comparatively accurately.
The general rule here is: you typically look at at least a three-year period and record all expenses incurred in connection with the tool or software. This isn’t just about license costs! Training, implementation costs, or strategy costs (meetings, working time & the like) also count.
It’s important that, depending on the type of tool, you define clear KPIs that are distinct from one another and can be measured regularly before and after the implementation of the tool or software.
With a complex MarTech stack, you can use a kind of rating approach. Since it’s not possible to clearly measure the ROI of each individual tool, an evaluation method is a good solution. You can follow the Berkus Method, an evaluation approach for startups that are in early stages. What’s special about it: you don’t evaluate in monetary terms, but with a rating that fits you and your company.
To do this, you develop a scale and components tailored to your MarTech stack. These might look as follows, for example:
Interaction with the rest of the MarTech stack
Fulfills exactly the purpose it was intended for
Enables you to open up new channels
Reduces the cost of acquiring new customers
Improves the customer experience
Is easy to use
Increases security
You then award points on your scale for each individual tool in your stack. In the end, this gives you a rating for each application and makes them comparable.
Which option is best for you to measure MarTech ROI depends on many factors. Do you use three tools or as many as 36? The relevance of the applications can also vary greatly. In the end, it’s up to you: find the way to evaluate your MarTech stack that enables you to make the most efficient decisions.
Top news from the Matchilla MatchZINE – the MarTech magazine
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Best practices from other marketing decision-makers on MarTech
and much more!
Till Zier is CPO at Matchilla and, as a MarTech expert, reports in MatchZINE on news and trends in marketing, automation, analytics and data.
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