Beginner’s Guide to Marketing ROI

Did you know marketers who compute their ROI are 1.6 times more likely to be granted a larger marketing budget for future activities?

B2B marketing ROI can be tricky to prove and many businesses have a tough time measuring it. ROI is extremely helpful in businesses to see if the direction needs to change or if the marketing strategies should stay the same. There are strategies and technologies that can help a business measure their ROI and, if needed, how to increase it as well. Here are some of the most effective ways to make sure you are gaining ROI how you want to. 

 

What is Marketing ROI?

ROI stands for return on investment. In marketing, it is used to measure profitability and impact across all levels of the organization. ROI is important because it tells marketers which investments were worthwhile and helps justify spending in the future. 

The true “return” that companies see is when an investment impacts the business positively, such as when a lead converts, or completes a purchase. But marketing ROI can be tough to measure if the martech stack doesn’t allow for high visibility into every customer touchpoint. How can your company accurately attribute lead generation to marketing efforts if your technology doesn’t have data to support that hypothesis?

Another challenge is that some marketing and sales activities take place offline, which doesn’t allow for seamless tracking in your CRM (customer relationship management tool). It’s important that marketing and sales are aligned and have the proper data hygiene to have accurate attribution.

 

How is Marketing ROI calculated? 

To calculate ROI you subtract marketing investment from returns, and then divide that by the investment. 

(Return – Investment) / Investment = ROI. 

To break it down, measuring your marketing ROI tells you how much money was made versus the money spent. 

Looking further into the ROI equation, your company can tell if it has received a positive return on its investment. If for every $1 invested into marketing, you receive a $10 return, you have  a positive return because the money made is greater than the money spent. Dividing by the investment gives you a ratio (10:1 being outstanding and 2:1 being not profitable) to gauge how your business will perform. 

If a business is not aware of their marketing ROI, they will not know if it is time to pivot their investments to something more profitable or to keep spending on worthwhile investments. Digital transformation projects require major investments from companies, but the chance for ROI is also significant – not to mention the inherent value of keeping up with shifting customer behaviors

 

What form of marketing has the best ROI and why?

It is estimated that every dollar spent on email marketing leads to a $40 ROI for businesses. Email marketing has the best form of ROI because of its capability to create an extremely personalized experience for the customers, and because it is easy to track analytics and make informed decisions about your customer’s communication preferences. Email marketing is used across B2B and B2C industries and has many use cases including:

  • Product alerts
  • Shipping updates
  • Sale announcements
  • Lead nurturing
  • Content marketing
  • Award announcements

Another marketing tactic that delivers high ROI is SEO (search engine optimization) which is used to enhance your website and increase its visibility in search results. There are many ways to boost SEO, ranging from small fixes and keyword targeting to major strategic revisions. Unlike other forms of marketing, SEO is a “long-term strategy” that creates “long term revenue.” 

 

What KPIs should marketers be measuring?

KPIs, or key performance indicators, help to evaluate the productivity of a company’s marketing strategy. These are important because they help a company confirm that the decisions they are making, along with the money they are spending, are producing the returns they wish to see. KPIs are created during the planning stage with clearly defined and measurable goals that can be evaluated at various milestones. Measuring effectiveness against predetermined KPIs helps to objectively show what the marketing strategy accomplished and where it fell short.

Common measurements to look for include:

  • ROMI (Return on Marketing Investment)
    • Measuring ROMI helps marketers see if the marketing activities they are doing are contributing to their profit or if a different channel would be more effective.
    • KPI example: Achieve a 25% ROMI in 12 months.
  • Lead conversion rate
    • Measuring the lead conversion rate shows marketers the percentage of people or companies that ended up using their product after expressing interest. It is essential to measure because it shows how a business’ sales funnel is performing.
    • KPI example: Increase lead conversion rate by 10% in quarter three. 
  • Email open rate 
    • Measuring the email open rate shows the quality of your email list and how that connects to your email subject lines. 
    • KPI example: Achieve an average email open rate of 12% across lead nurture drips in 2022. 
  • Website traffic
    • Website traffic is measured in terms of the number of people visiting your website or the number of pageviews across your website. 
    • KPI example: Earn at least 15M sessions in 2022.
  • SEO
    • A common KPI to measure the efficacy of a brand’s SEO strategy is through search rankings. The more SEO value of a page, the higher it should rank in search.
    • KPI example: Secure all main landing pages a first page spot in Google’s search results. 

How to increase marketing ROI

There are a few strategies that help to minimize investment and maximize results. Here are a few top recommendations:

  • Use multichannel marketing. Having a multichannel marketing strategy makes your company available on as many platforms as possible. More touchpoints means more opportunities for brand awareness, message reinforcement, and analytics.
  • Utilize inbound marketing. This allows customers to have more genuine experiences where they are the ones driving the marketing experience.
  • Spotlight material that’s applicable to your target audience, and help them use that material throughout the purchase journey.
  • Create a personalized customer experience. This makes customers feel valued and draws them in.
  • Favor quality of work over quantity, a high quality blog with strategic content and SEO behind it creates more buzz than brief writings.
  • Use your analytics. Measure frequently and analyze deeply to pull insights that can improve your marketing strategy.

Increasing ROI is important to any business. If you are going to put money into any business initiative you want to make sure that you will be making returns and proving the value of the investment. 

Want to learn more about B2B marketing ROI and how your marketing and IT departments can work together to maximize it? Download Solutions For The C-Suite: How CIO And CMO Collaboration Drives Digital Innovation.

Scroll to Top