One of the most frequent questions executives ask of marketers is how the marketing plan is delivering. In other words, what is its return on investment (ROI)? How can they gauge the value of use of marketing dollars when the indicators are things like clicks and views and shares? Does that even relate to actual revenue? As a marketer, if you can’t answer these questions about marketing ROI, you’re going to fight an uphill battle when it comes to winning approval for your budget.
What is ROI in marketing, anyway, and how do you show it?
Determining marketing ROI requires beginning at the beginning, meaning the objectives your organization has set. As Hootsuite’s Sarah Dawley says in A Guide to Measuring Social Media ROI, the first question to ask is “How are your marketing efforts contributing to corporate goals?”
If your plan was created to support a goal of increased sales, then you will calculate your marketing ROI by dividing the profit gained by the total investment in marketing efforts that drove the sales, then multiplying by 100 to arrive at a percentage.
In order to directly relate marketing efforts to sales, marketing and sales teams have to be collaborating rather than isolated in silos. Our earlier post on why it’s smart to align sales and marketing has direct bearing on making sure you can evaluate results and know your ROI.
With the right metrics in place and appropriate software to track them, marketing and sales teams working together can gather data about responses to specific marketing channels. HubSpot, for instance, has some good tools that connect the two.
Marketing ROI isn’t just about sales
Maybe your objective is not directly monetary, though. If that’s the case, as it often is with inbound marketing, your ROI is not so easily calculated, is it? With analysis and carefully crafted wording, you can still convey to those who ask how successful your marketing investment has been in achieving business goals.
With your strategic objectives clearly in mind – and they should always be clearly in your mind – Hootsuite’s guide counsels that you evaluate your marketing plan by asking, “What kinds of things did your target audience do after exposure to your campaign? Did these actions align with your goals? Where did they fall short? How can they be improved for next time?”
Because, yes, besides being able to justify your budget, which of course is essential, there’s an equally important reason you need to know your marketing ROI: It provides actionable business intelligence about what works and what needs improvement.
Five-step marketing ROI action plan
Especially in the realm of inbound marketing, use these five strategies to arrive at, evaluate, and frame your marketing ROI.
Start with clear organizational objectives
Plan all marketing to contribute to reaching them. Communicate in these terms with those in leadership – whether your colleagues or those to whom you report. How are the marketing efforts supporting your shared strategic goals?
Set realistic, measurable goals for specific timeframes
Depending on your objectives, measurables could include things like response time to inquiries, lead generation from emails, or conversions from a landing page.
Build processes that connect teams
Look into software that will track activities and responses, ideally to be used jointly by marketing and sales. If your goals include customer service, consider looping that team into processes that dovetail with marketing as well.
Plan to receive timely reports
In the social media marketing world, campaigns have a short life. Staying on top of the data can require daily check-ins. You can also set up summaries to get sent to you regularly, maybe the same time on the same day every week. Making corrections and grabbing opportunities are part of using your marketing ROI as more than a number to report.
Explain the value of social media metrics beyond vanity
All those likes, comments, and shares are about so much more than ego strokes. How does evidence of social media engagement relate to your business objectives? That’s what you want to convey.