Let's face it: marketing in the B2B tech world is tough. If you're in telecom, IT, or cloud services, you know the struggle. You're pouring money into different marketing channels, but are you really sure you know what's working?
A whopping 61% of senior marketers struggle to demonstrate the impact of their marketing actions on financial outcomes.1 But what if there was a way to see the whole picture? Enter marketing mix modeling (MMM). It's a fancy term for a simple idea: using data to figure out what marketing actually works.
In this blog, we'll break down the importance of marketing mix modeling and what it can do to pump up your marketing efforts.
What Does Marketing Mix Modeling Mean?
At its most basic, marketing mix modeling is a way to figure out which parts of your marketing activities are moving the needle. It's a statistical analysis technique that helps measure how your marketing efforts impact key performance indicators (KPIs) like sales, revenue, or customer acquisition.
With this model, you can see how well your past marketing strategies worked, predict how future campaigns might perform, and figure out the best way to spend your marketing budget. For B2B tech companies, this is huge. When leveraged correctly, marketing mix modeling can help you make sense of complex sales cycles where a customer might interact with your brand dozens of times before purchasing.
Why Should You Use Marketing Mix Modeling?
As marketers, we're constantly juggling an ever-growing toolbox of tactics and channels, from Google Ads and social media to trade shows, webinars, and more. Some are easy to track, others...not so much. Plus, these tools often lose some of their attribution tracking capabilities when you start blending data from various sources. Marketing mix modeling helps you account for all your marketing efforts, both above and below the line.
While marketing mix modeling has been around for a while, it's becoming even more relevant in today's digital landscape. With all the changes in privacy laws and the phasing out of cookies, traditional attribution models are getting trickier to use. MMM is privacy-friendly and doesn't rely on individual user data, so you can still get powerful insights without worrying about running afoul of GDPR or other data privacy regulations.
Here are some specific marketing performance insights MMM can help you uncover:
ROI
We've all been in that meeting where someone asks, "What exactly are we getting for all this marketing spend?" With marketing mix modeling, you can confidently present a report filled with concrete data that shows what's working and what's not.
Marketing mix modeling helps you identify which marketing channels are your top performers and which ones aren't pulling their weight. You'll be able to see how changes in your marketing spending affect your bottom line, almost like you're running a real-time experiment. And when it comes to deciding where to invest your marketing budgets, MMM provides the insights you need to make data-driven decisions that improve your ROI.
Pricing Optimization
Pricing in the B2B tech world can be challenging. Set your prices too high, and you might deter potential customers. Too low, and you're not maximizing your revenue. It's a delicate balance, but marketing mix modeling can help you find that sweet spot.
By incorporating pricing data into your marketing mix model, you can better understand the price elasticity of your products or services. You might discover that a small price increase has minimal impact on demand, giving you room to increase profits – or that a slight price drop could attract a whole new segment of customers.
MMM can also help you predict how potential pricing changes might impact your sales and revenue so you can test different scenarios without risking your actual bottom line. By aligning your pricing strategy with your marketing efforts, you can create a cohesive approach that drives real business growth.
Product or Service Launches
Launching a new product or service in the B2B tech space is always a high-stakes endeavor. You want to make sure you're making the right moves, especially since nearly 71% of marketers are facing increased pressure to generate leads.2
Marketing mix modeling provides data-driven insights to help you navigate these critical launch moments. You'll be able to identify the most effective channels and tactics for promoting your new offering, ensuring you're not wasting resources on less impactful strategies.
With MMM in your corner, you can approach product or service launches with greater confidence. Instead of relying on past experiences that may not apply to your current situation, you'll have a data-driven strategy for success.
Trade Promotions
For B2B telecom, IT, and cloud providers, trade shows and industry events often represent a significant chunk of the marketing budget. These events can be great opportunities, but they're also major investments. How can you be sure you're getting the best return on that investment?
Marketing mix modeling can measure the impact of your trade show participation on lead generation and sales, giving you a clear picture of the event's value. You can compare the ROI of different events and promotional activities to decide which ones are worth your time and budget. And perhaps most importantly, MMM allows you to optimize your trade show strategy to focus on the most impactful opportunities.
Forecasting
Marketing mix modeling provides powerful forecasting capabilities to help you predict the potential impact of future marketing investments. You can estimate how changes in external factors might affect your business performance, helping you prepare for various scenarios. Plus, MMM enables you to develop more accurate sales and revenue projections based on your marketing plans.
By leveraging MMM for forecasting, you can make more strategic decisions about your marketing budget. Instead of simply guessing, you're basing your choices on data-driven predictions to better align your efforts with long-term business goals. With MMM, you're not just reacting to the market; you're anticipating it and positioning yourself for success.
Components of a Marketing Mix Model
To get the most out of MMM, you need to understand what goes into creating an effective marketing mix model. For B2B telecom, IT, and cloud providers, this includes:
Base Sales
This is your starting point – the business you'd get even if you didn't do any marketing. It includes things like:
- Your brand reputation
- Existing customer relationships
- Your market share
- Seasonal trends
Understanding your base sales data helps you see what's really driving your business beyond just your marketing efforts.
Incremental Sales
This is the extra business you get from your marketing activities. It helps you see the direct impact of your marketing efforts on your bottom line. This could come from:
- Advertising campaigns
- Content marketing
- Email campaigns
- Trade shows
- Sales enablement tools
By separating incremental sales from base sales, you can see exactly what your marketing strategies are bringing to the table.
4 Variables To Analyze for Marketing Mix Modeling
Building an accurate marketing mix model involves analyzing a range of variables that influence business performance. Let's explore the four primary variables you should consider:
Calendar-Based Variables
These are time-sensitive factors that can make your business performance unpredictable, including:
- Seasonality: Just as ice cream sales soar in summer, many B2B industries have their own "seasons." For example, IT spending often increases towards the end of the fiscal year as companies look to use up their budgets.
- Holiday Periods: Some businesses virtually shut down during holidays, while others can't keep up with demand.
- Business Cycles: Economic trends and industry-specific cycles can significantly impact purchasing decisions in the B2B space.
By incorporating calendar-based variables into your model, you can better understand and account for natural fluctuations in your business performance.
Marketing Tactics
This category covers the various channels and activities you use to reach your audience. For B2B telecom, IT, and cloud providers, common marketing tactics include:
- Digital advertising (search, social media)
- Content marketing (blogs, whitepapers, case studies)
- Email marketing campaigns
- Webinars and virtual events
- Trade show participation
- Account-based marketing initiatives
Analyzing these variables can help you measure the effectiveness of each marketing tactic and optimize your overall marketing mix.
External Factors
These are elements outside your direct control that can impact your business, such as:
- Economic Conditions: GDP growth, inflation rates, and other macroeconomic indicators can influence B2B purchasing decisions.
- Competitor Activities: New product launches, pricing changes, or aggressive marketing campaigns from competitors can affect your market share.
- Industry Trends: Technological advancements, regulatory changes, or shifts in customer preferences can impact demand for your products or services.
- Global Events: Factors like pandemics, natural disasters, or geopolitical events can have far-reaching effects on business operations and decision-making.
Incorporating external factors into your modeling process can help you better contextualize your marketing performance and make more accurate predictions about future business outcomes.
Internal Factors
Finally, we have the variables you can control. These are your secret weapons and often include:
- Features: Changes to your offering can impact its marketability and perceived value.
- Pricing Strategies: Adjusting your pricing model can affect demand and competitive positioning.
- Sales Processes: The effectiveness of your sales team and the quality of your lead nurturing processes can impact conversion rates.
- Customer Service: The level of support your teams provide can influence customer satisfaction and retention.
Analyzing these factors alongside your marketing activities provides a holistic view of what's driving your business performance and areas for improvement beyond just marketing.
What Are the Benefits of Marketing Mix Models?
Let's break down the biggest benefits you can expect from implementing marketing mix modeling:
Better Decision Making
Marketing mix models give you hard data to make smarter decisions about your marketing spend. You'll be able to justify your marketing investments to the higher-ups with real numbers, and you can continuously improve your marketing mix based on what's actually working, not what you think might be working.
Improved Budget Efficiency
Marketing budgets were 9.1% of total company revenue on average in 2023, but 71% of CMOs said they didn't have enough funds to fully execute their strategies.3 By identifying which marketing channels are your top performers, marketing mix modeling helps you get more bang for your buck. You'll see a better return on your marketing investment because you can cut out the underperforming activities and focus on what works. This is especially important if you're working with a tight budget – MMM helps you make every dollar count.
Complete Performance Measurement
Unlike tools that only look at one channel at a time, marketing mix models give you a bird's-eye view of your entire marketing ecosystem. This helps you understand how various marketing activities work together, measure the impact of both online and offline channels, and account for outside factors that affect your business.
Accurate Planning and Forecasting
The predictive power of marketing mix modeling can help you align your marketing activities with business objectives more effectively. You'll be able to make more accurate sales projections and adapt quickly when market conditions change.
Competitive Advantage
MMM can give you an edge over your competitors. You'll be able to react faster to market changes, spot and capitalize on new opportunities quicker, and make smarter decisions about product development and market positioning. While your competitors are still guessing, you'll be moving forward with confidence.
Marketing Mix Modeling Best Practices
Want to get the most out of your MMM efforts? Here are some tried-and-true best practices to follow:
Focus on What Matters
Marketing mix models can give you a ton of high-quality data, but you shouldn't get overwhelmed. Zero in on the insights that align with your business goals. What are your key performance indicators? Maybe it's lead generation, customer acquisition cost, or revenue growth. Whatever they are, make sure your MMM analysis is geared towards these priorities.
Once you've identified the most relevant insights, prioritize improvements that'll have the biggest impact. Maybe you'll discover that your webinars are driving more qualified leads than your paid social media campaigns. Armed with this information, you can shift resources accordingly.
Keep Improving
Use MMM insights to constantly refine your marketing strategy. This isn't a one-and-done process; it's an ongoing cycle of analysis and optimization. Start by shifting budgets to your top-performing channels. If your analysis shows that industry events are outperforming digital marketing ads for lead generation, consider allocating more resources to your event marketing strategy.
Don't be afraid to experiment, either. Try new marketing combinations to find what works best. Maybe a mix of content marketing and targeted email campaigns yields better results than either tactic alone. And don't forget about your messaging – use the data to tweak your value proposition and communication strategies based on what resonates with your ideal audience.
Get Everyone on Board
For marketing mix modeling to really work, your entire team needs to trust it. Start by involving key players in developing the model, such as representatives from your marketing, sales, finance, and product development teams. By getting input from different departments, you'll ensure the model reflects the complexities of your business and addresses everyone's concerns.
Transparency builds trust, so be open about where your data comes from and how you're using it. Share your methodology, explain your assumptions, and be clear about any limitations of the model. And don't forget to regularly check the model's predictions against real-world results. This not only helps refine the model but also demonstrates its value to skeptics.
Marketing Mix Modeling FAQs
Still have questions? We've got answers:
How long does it take to build a good marketing mix model?
It usually takes three to six months, but this timeline depends on how complex your business is and the quality of your data. Businesses with multiple service offerings or diverse marketing channels may take more time. Similarly, if you need to clean up or consolidate data from different sources, this could extend the process. Remember to be thorough and patient since a well-built model will pay off in the long run.
How often should we update our model?
As a general rule, you should update your model at least once a year to keep it accurate and relevant. However, businesses in the tech sector might benefit from quarterly updates. The goal is to keep your model in sync with your business reality and market conditions.
How is marketing mix modeling different from attribution modeling?
MMM looks at the big picture, including both online and offline factors. Marketing attribution modeling focuses more on digital touchpoints in the customer journey.
While both MMM and attribution modeling measure marketing effectiveness, they approach the task differently. Marketing mix modeling is particularly good at showing the overall impact of marketing on business outcomes. Attribution modeling takes a bottom-up approach. It focuses primarily on digital touchpoints and tries to assign credit to specific interactions that led to a conversion. Attribution modeling is helpful for understanding the customer journey in detail, especially in digital marketing contexts.
Many businesses see great results using both approaches complementarily – MMM for strategic, big-picture insights and attribution modeling for tactical, channel-specific optimization.
Can MMM work for B2B businesses with long sales cycles?
Absolutely! While long B2B sales cycles can present challenges for some analytics approaches, marketing mix modeling can be adapted to handle these complex journeys.
The key is to incorporate appropriate time lags into your model and to focus on leading indicators along the sales funnel, not just final conversions. For example, you might track metrics like qualified leads generated, sales pipeline value, or customer engagement scores. By doing so, you can gain insights into how your marketing strategies impact various stages of the B2B buyer's journey.
What kind of data do we need to get started?
You'll need historical data on your marketing spend, sales figures, and any relevant external factors. The more detailed, the better! Ideally, you'll want at least two to three years of weekly or monthly data to capture seasonal trends and long-term patterns.
Max Out Your Marketing Mix Modeling With Mojenta
Marketing mix modeling isn't just about crunching numbers; it's about making smarter decisions, spending your budget more efficiently, and driving real business results. In an industry where every marketing dollar counts, MMM gives you the insights you need to stay ahead of the curve.
Unfortunately, implementing MMM can be complicated. That's where Mojenta comes in to pump up your marketing game! With our 14 years of experience in the telecom, IT, and cloud industry, we've got the tools and expertise to make your marketing dollars work harder than ever.
Ready to get more out of your marketing investments? Book a consult with the Mojenta team today.
Sources:
- https://www.glowfeed.com/2024/04/04/marketing-effectiveness-research
- https://cmosurvey.org/wp-content/uploads/2024/04/The_CMO_Survey-Highlights-and-Insights-Report-Spring_2024.pdf
- https://www.gartner.com/en/newsroom/press-releases/2023-05-22-gartner-survey-reveals-71-percent-of-cmos-believe-they-lack-sufficient-budget-to-fully-execute-their-strategy-in-2023
