Creating an ROI model for your marketing efforts is critical to knowing what’s working well and what’s not. Narrowing down metrics that matter most to your business and being able to back up those metrics to tangible business results will also help with budgetary needs. To get started, here are a few tips to help you build out your marketing ROI model…
Have a Marketing Strategy
A strategy should be kept simple and concise. Know the overall objective of your organization and align your marketing strategy to ensure there’s not only internal buy-in, but that your strategy will foster growth.
Identify Tactics That Will Foster Your Strategy
Be specific and determine no more than three to five tactics as a starting point. Next, pinpoint the KPIs associated to each tactic. There are a plethora of KPIs you can attribute to each tactic, but choose three to five that will provide the best insight and help you steer your efforts. For example, you may want to track visits, visit to lead percentage, CPL (cost per lead) and CPE (cost per engagement).
Build Out Buyer Personas
Knowing your target demographic is one thing, but knowing the people who are making decisions to buy your product/service well into who’s using your product/service is imperative to success. Personalization is key to triggering action from those you want as customers. Show that you understand their challenges and major pain points by having solutions ready and positioned to solve their problems.
Integrate and Align with Sales Objectives
Work backwards in your model to nail down how many leads you may need to generate. Depending on how you define a “lead,” know that anything from soft conversions of email subscribers all the way to the attendance of live or on-demand webinars should be considered.
Moreover, whether you have a self sign-up SaaS product, sell enterprise software, sell consumer goods, or even sell consulting services – the importance of knowing the number of leads you’ll need to generate to close into actual dollars will help you figure out how much of your overall budget needs to go towards just lead generation efforts.
Also, take into consideration branding efforts such as air cover (i.e. creating awareness and building thought leadership). The key here is to set realistic expectations because air cover will not directly account for sales or leads generated right away.
Create Your Own Funnel
Customize your marketing funnel down to the purchase journey you expect your target customer to take. Doing so will help you better understand where you lose people within the funnel, the type of content that engages, where promotional messages can be injected, and which channels are contributing most to sales. Here’s an example of a funnel I put together to further illustrate my point:
Bring it All Together
Forecast what you believe you can achieve and make room for actuals (this includes spend) as well. A great template you can use and customize is this master budget template created by HubSpot:
Lastly, to calculate your ROI, benchmark both your forecasted and actual numbers against sales numbers. You can break it down even further by doing this with every channel you’re spending marketing dollars and tracking KPIs to see which channel yields the best conversions all the way to the highest LTV. For instance, if you spend $100 and you get 15 leads and each lead is valued at $10 ($150 total) then your ROI is 50%.
Have more to add? Do so in the comments section below.