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How to show marketing ROI 

How to show marketing ROI

It’s well known that marketing can have a positive impact on any organisation. To quote Andrew Dallas, “Content builds relationships. Relationships are built on trust. Trust drives revenue”. However, demonstrating the worth of marketing can be similar to solving a cryptic puzzle. Marketing requires an investment of time, resources and creativity but how can you truly show the return on the tangible and intangible investments? This is a question that many marketing teams grabble with all over the world. That’s why in this post, we’re delving into marketing Return on Investment (ROI) and discussing the ways to showcase marketing’s worth, as well as the potential challenges in doing so.  

What is ROI in marketing and why does it matter? 

ROI is essentially: how much did you gain from an investment? In business terms, it refers to the revenue generated compared to the cost of the marketing efforts and resources. It can also help you to understand which marketing channels perform the best. Being armed with this information can help get more internal buy-in and therefore more budget allocated. Additionally, once the budget is allocated, it helps you to decide how to use the budget for the best return.  

However, one of the most important ways ROI is used is to prove marketing’s worth. By demonstrating the organisational benefits of marketing, you can show that it is a valuable asset to have. We know that when budgets get cut, one of the most common places to go first is marketing. So again, having the ROI figures at the ready can help with the business case for marketing and get stakeholder buy-in. 

ROI in marketing: challenges to consider 

If only you could link all business growth with marketing, but unfortunately it isn’t that simple! There are many factors and challenges that must be considered when calculating marketing ROI. This can be a frustrating process, especially with organic marketing as the costs are much more blurred. Some of the common marketing ROI challenges include: 

  • Defining costs: Marketing isn’t just a one-man band. It involves a range of resources which could include, paid ads, social media platforms, content creation tools and even employee time. Therefore, determining the real cost of implementation can be a marketer’s nightmare as some elements might be intangible.  
  • The race against the clock: Marketing builds momentum over time. Some say that to see the real results of content marketing, it can take anywhere between several months to a year. Therefore, patience is key when measuring marketing ROI. However, this can be difficult to articulate to stakeholders when they’re expecting an immediate impact! 
  • Attribution: There are many attribution models out there that all calculate attribution slightly differently. Each has its own advantages and disadvantages, but they all attempt to show which touchpoint converted a customer. However, this isn’t as straight forward as it sounds… For example, a prospect might see your social content for months and build interest in your product/service by doing so, but they never interact with it. They then go to the website to book a call. The website then gets the credit, but social media played the biggest role. This demonstrates a classic example of why attribution can be tricky to determine. 

Calculating marketing ROI 

There’s no one-size-fits all formula for calculating ROI. However, as demonstrated by MailChimp, a popular method is:  

ROI = [((number of leads x lead-to-customer rate x average sales price) – cost or ad spend) ÷ cost or ad spend] x 100. 

  • Number of leads = those interested in your product/service 
  • Lead-to-customer rate = the percentage of those who buy from you 
  • Average sales price = the price of service/product 
  • Cost or ad spend: cost to create and promote services/ads 

This helps you to understand the return on your investment in terms of revenue generated. However, it’s important to note that this is just one quantitative factor that can be used to show ROI. 

Qualitative marketing ROI metrics 

Marketing’s impact isn’t just demonstrated by the cash figures. For example, these factors could also demonstrate ROI and can be very valuable in showing marketing’s value: 

  • Word of mouth: Marketing can help with referrals and recommendations as it can promote brand trust and satisfaction, leading to organic growth 
  • Sales support: The materials created by marketing can aid the sales team with their conversations. This in turn, helps to win more deals 
  • Customer clarity: Your leads can gain a better understanding of your product/service after consuming the marketing content. This can both help to boost conversion rates and reduce the time it takes for a conversion to take place. 
  • Positive feedback: More positive reviews can be received about the sales and onboarding process. Marketing can be a key player in this, and this can lead to a positive brand perception. 

By combining quantitative and qualitative metrics, you can create a more holistic view of how marketing is making a real positive impact on your organisation.  

Final thoughts 

Demonstrating ROI can be a tricky process. You must consider the challenges, the metrics and how best to showcase the real value behind marketing. Hopefully this blog will have provided insightful information that will help make the process easier to illuminate the power of your marketing efforts. Looking for marketing support? Read more about how a marketing agency can enhance your marketing team.

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