Tuesday, March 22, 2011

How to Measure ROI for Business Development and Marketing

Actively and effectively tracking business development and marketing return on investment (ROI) is vital for showing firm leaders how essential marketing and business development is for firm success and maintaining (or gaining) a “seat at the table.” If tallying the number of dollars won is the only way your firm is measuring ROI, you’re doing you and your marketing department a disservice. Here’s how your firm should breakdown the measurement of ROI for BD and marketing efforts:

Campaign or program ROI

This is where your firm should measure ROI of a specific project or program. In this area, metrics that should be maintained include:

Advertising dollars spent to increase brand awareness

Trade show dollars spent to increase business

Direct mail dollars spent to increase proposal activity

Market or client ROI

This is where your firm should measure ROI for a market sector or client. In this area, metrics that should be maintained include:

Staff dollars spent pursuing projects

Marketing dollars spent on market sector

Dollars spent on client retention vs. new client acquisition

Business development staff ROI

Your firm should have a system in place for measuring the ROI on BD and marketing staff. This should include staff members who are both technical and non-technical, but have budgeted responsibilities in BD. Measuring ROI in this area can be difficult for many firms because they measure ROI for entire business development effort, basing their measurements on “gut feelings” rather than formal calculations.

As a result, the perception (whether correct or not) of a low ROI can lead to termination, while perceived higher ROI leads to promotion, bigger territory, market, ownership, etc. This section alone makes it a priority for your firm to gauge business development success as accurately as possible.

Gauging BD success

To measure BD ROI effectively and accurately, your firm needs to keep various metrics on the process all year long. Be wary of firms that focus on dollar amounts at the end of the year. Make sure that your firm is keeping metrics for the following:

Percentage of RFPs to proposals

Percentage of proposals to shortlist

Percentage of shortlist to wins

Number of leads generated

Percentage of new vs. repeat clients

Maintaining a wider view on marketing and business development investments and ROI will enable your firm to have a greater understanding of how their marketing and BD efforts affect overall success.

Looking for more information on how to better manage your BD efforts…come to PSMJ’s 2011 A/E/C Marketing Bootcamp: THE Program On How To Get And Keep Clients. This spring, PSMJ is providing 5 locations all across North America to give your whole firm the tools and confidence you need to succeed in bringing in more work for the firm. Click here for more information.

1 comment:

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