Rebecca Theriot

Contents Email Us Tweet This Introduction The whole concept of analyzing return on investment for a marketing budget is based on the premise that dollars spent on marketing actually are an investment, and not an expense. While expenses are necessary and unavoidable costs of doing business, your marketing dollars can – and should – directly contribute to the bottom line. Before trying to determine how well (or not) you spend, take a moment to identify what you know and don’t know about your sales process. An effective strategy and optimized ROI will depend on your answers. Do you know where your leads come from? Do you know the steps they completed to reach the qualification of lead? What are your objectives for marketing investment? How do you measure the impact of your marketing efforts? Can you predict the impact on sales of a change in marketing budget? It is imperative to determine which of your marketing efforts are working, and how well, in order to decide where to direct your resources. There are objective measurements which can be applied to your marketing activities, and this guide will describe all of the ones you want to be sure are included. Email Us Tweet This Dene fi your KPIs Your marketing ROI is first and foremost defined by the goals you set for your campaigns. Are you spending to improve your brand’s visibility on search engines? To increase traffic to your website? To generate leads and ultimately convert them into customers? Your absolute goal is to increase sales, but the way you get them depends on what you focus your efforts. As a consequence, your marketing ROI cannot be calculated at the bottom of the sales funnel if your objective was merely to gain traffic. The ROI formula we will present in this guide is based on the assumption that your marketing expenses are destined to grow your sales. The key is to track the data pertaining to the buyer’s journey so you can define the right key performance indicators. Simply put, a KPI measures how well you are doing in the most important actions you are taking to meet your goals. But you have to know which factors need to be measured, and how that information translates into profits. This section will explain which numbers you need, and what they mean to your business. Email Us Tweet This 5 Reach Engagement Conversion REACH One of the most important statistics you need is the number of individuals who are seeing your content, and that is what Reach is all about. However, there are other factors which provide context for that number, and they are every bit as crucial. ENGAGEMENT Obviously, you would like for viewers to do more than just see your content. They will hopefully respond to it in some way, as well – preferably in a way that will result in sales for your business . CONVERSIONS This is the end goal. Everything you do in marketing is for the purpose of first generating leads, and then turning those leads into sales. Email Us Tweet This 6 * Click-through rate refers to the engagement from a CTA Although each and every one of these metrics can teach you a lot about how well you are doing, the KPIs you will closely watch and analyze are down the funnel, from conversion to close. From there on, you will be able to: Calculate your Website Lead to MQL Your Marketing Qualified Lead strategy determines the criteria (lead scoring) a lead must meet to before becoming a Sales Qualified lead. Some of these determining factors can be: Demographics (gender, age, homeowners, …) Professional characteristics (company size, job title, industry, …) Interests (content downloads, request for information, pages viewed, …) Activity level (number of pages viewed, forms completed, …) Sales cycle (how long you nurture a lead before reaching the conclusion they will not buy) Email Us Tweet This 7 Calculate the MQL to SQL ratio At this point, the sales team get on board to qualify the leads further. It is crucial to have open and frequent communication between marketing and sales so resources are optimally used. If the MQL to SQL ratio is too low, not only less leads are closed, but it also points out to a dysfunction in the process. Sales essentially will filter the leads through the same criteria but may have a different lead scoring grid. Make sure both departments are aligned. Calculate the SQL to Quote ratio From the moment the sales team takes over the leads, they are working toward presenting a quote. The process is part of the whole nurturing strategy. Of those qualified prospects, how many received a quote? Why not all of them? Obstacles to proposals can be the timeframe the prospect imposed, their budget, or that competition moved quicker/better. Calculate the Quote to Closed ratio How well the sales team is closing is the KPI every business owner essentially cares about. But the ratio is meaningless if not compared to previous years, objectives and expectations. Any negative fluctuation in performance means something can be improved. Conversion Funnel Visitors Leads MQL’s SQL’s Quotes Closed Email Us Tweet This Follow The Money 8 Now that you know exactly what information is required, you need to determine how to obtain it, and the most efficient way to use it. This section will point you toward the must have analytics tools. Tracking Tools Investment Investment king Tools Tracking Tools Investm Tracking Tools Tracking Tools estment Investmen Email Us Tweet This 9 Tracking Tools The more you know about what your website visitors do once they find you, the more efficient your website will be as a sales pipeline. The following tracking tools provide the information you need every step of the way HubSpot Offers a marketing analytics dashboard with a variety of tools and reports. You can implement a full on CRM strategy and automate workflows for added performance. Highlights include: Tracking Visits, Contacts and Customers A To Z Campaigns Set Up Landing Page Performance Blog Performance Email Campaigns Results Contact Segmentation MOZ Provides tools to streamline SEO and boost your website’s visibility, including search rankings. Highlights include: Keywords Search and Rankings Page Optimization Traffic Analysis Link Analysis Opportunities Competitive Metrics Email Us Tweet This 10 Tracking Tools Google Analytics Allows you track site metrics and analyze your advertising ROI. Highlights include: Site Performance Real Time Traffic Visitors Facts PPC Activity Social Media and Blog Performance Kissmetrics Was co-founded by marketing guru Neil Patel to obtain in depth customer acquisition data. Highlights include: Conversion Rate Activation Rate Visitor Retention Conversion & Revenue Email Us Tweet This Marketing ROI Formula 11 Gross Profit – (Marketing Investment) Marketing Investment This simple formula gives the return on investment all-in. From resource spending in house to fees to third parties. But in order to make the most of your budget – in perspective with your goals – you need to know the cost of customer acquisition. This information is essential for you to for build scenarios and forecast results. Knowing how much you need to spend to acquire 1 sale will help you allocate your marketing budget, based on the growth goal. Cost of Customer Acquisition = Marketing Investment / # Customers Acquired Lenskold Group, a leader in marketing profitability management, has designed a free online tool that allows to study different scenarios and help the budgeting decision process. Email Us Tweet This HubSpot Inbound Marketing ROI 12 HubSpot released its annual report on Inbound Marketing ROI, spanning a 2 year period. Companies that have implemented the inbound methodology using the HubSpot’s marketing software have seen the number of visitors quadruple, the number of leads triple and 72% report a considerable increase in sales revenue within just 1 year. Calculate your potential Return On Investment if you used HubSpot Inbound Software Calculate Email Us Tweet This GAINS IN ATTRACTING WEBSITE VISITORS 13 GAINS IN GENERATING LEADS Email Us Tweet This 14 Conclusion Once you amass the necessary tools, and gather the information they provide, you will then be able to determine where your marketing dollars will have the most impact. The result should not only be increased marketing ROI, but also increased sales. Your goal is to attract, convert, close and delight. While lead generation might be easier to figure out - though by no means easy to implement - lead nurturing may be more time and money consuming. It is essential to determine a clear roadmap so you can track your performance every step of the way and establish the “close or kill” to keep your ROI optimum. Email Us Tweet This