Ah, ROI, our old friend (and sometimes enemy). ROI is often the most frustrating part of marketing, but it’s also the most important — especially if you’re a marketer concerned about job security. And while the internet touts all kinds of formulas and calculators, there isn’t a single metric every brand should use to determine ROI.
Every brand has different needs, different strategies, and different tactics, so a one-size-fits-all approach to calculating ROI is overly simplistic (especially if you’re producing multi-channel campaigns). So how do you find out for your own organization? You have come to the right place. Here, we’ll walk you through the simple steps you can take to calculate the ROI for your b2b marketing – and avoid the most common mistakes we see when it comes to ROI.
What are the biggest obstacles to calculating ROI?
There are some common ROI issues we encounter with our clients. They mostly fall under three main categories:
- lack of preparation (eg, measuring is an afterthought)
- Lack of knowledge (eg, baseline information, criteria, etc.)
- Lack of tools (eg, no infrastructure setup)
All of this can hinder your ability to calculate ROI, but the truth is that there is a much bigger (and more common) mistake we see our clients make – and that doesn’t calculate ROI at all. The good news? If you’re reading this guide, you’re already doing a better job than a lot of marketers out there.
64% of B2B marketers say their organization’s ability to demonstrate ROI for content marketing is average or worse.
—Content Marketing Institute B2B Content Marketing Report 2022
How do you measure the return on investment for B2B marketing?
No matter what product or service you’re selling, the key to successfully calculating your ROI is to treat your ROI as an integral part of your content strategy — not as an afterthought. This means knowing what/how you will measure, and measure the correct things, and use the results to inform your next move. To help you do this, we’ve put in place the same process we use to help our customers calculate ROI – and improve it with each campaign.
1) Set specific goals.
It may seem obvious, but this is actually one of the biggest mistakes we see in B2B marketing. Without clear goals, the rest of your strategy collapses. Spend time setting goals (and include the right stakeholders in these conversations) to clearly define what you’re trying to achieve and determine the best measurement approach for tracking your success.
The clearer your goals, the easier it is to calculate your ROI.
Some things to keep in mind while setting goals:
- be specific. “Building brand awareness” sounds like a goal, but it’s actually a very vague idea that’s hard to measure. What does building brand awareness look like to you? Site visits? Video views? E-book downloads? If you want to accurately calculate your ROI, you need something tangible to measure. Oftentimes, many quantitative goals contribute to a larger qualitative goal (for example, building relationships), but it is the quantitative goals that will help you better calculate your ROI.
- Keep in mind the time frame. No return on investment appears overnight. It probably won’t appear in a few weeks. The return on investment in marketing is long-term, so think about how this will affect your goal.
Note: Make sure all stakeholders sign your stated goals. From now on, you need everyone on the same page to set yourself up for success.
2) Choose the correct metrics.
Calculating your ROI is all about accuracy and suitability. Just because you can measure something — and the numbers may sound exciting — doesn’t mean it’s the right thing to measure.
For example, while impressions can be a useful metric to show your reach if conversions are what you’re after, impressions can be just a metric of vanity. Sure, it may seem exciting for a million people to view your YouTube thumbnail, but it also means that a million people have viewed and passed it.
Remember: a bigger number doesn’t always mean the best results.
Look at your goals, and identify the metrics that are most relevant to measuring them.
3) Determine your budget.
Determining how much to invest in B2B marketing is always tricky, but it is usually dictated by your historical data. For this, there are a few numbers that you need to know.
Lead Value (LV): How much is lead worth historically?
lead value formula
Average lifetime value of a customer x closing rate
$50,000 (ACLV) x .04% (CR) = 2000 dollars lats
Cost per Lead (CPL): How much does it cost to take the lead?
Cost per lead formula
Total marketing spend / number of new leads
$5,000 (TMS) / 10 Leads (NL) = $500 CPL
Note: If you are a completely new company and don’t know your CPL, you may want to work backwards from your average CTL.
Click through price formula
Clicks / Impressions
10 (Clicks) / 100 (Impressions) = 0.1% CTR
For each campaign, select the number of leads you want to generate and then select Objective CPL. This should be less than your historical CPL. (If you use your existing CPL, you won’t technically “win” on any new leads – you’ll only break even.)
Do you have a distribution plan? Decide how to allocate your budget across channels before launching any campaigns.
4) Set up the metering infrastructure.
If you don’t have the tools and infrastructure to actually measure the things you want, no amount of planning or strategic planning will help. Once you know what you plan to measure (and how much you plan to spend), make sure you have the tools prepared to actually track it.
- Do you have all the tracking codes and pixels right where you need them?
- If you are using keyword tracking software, you will need to start tracking keywords Before Start your campaigns. (Some tools don’t pull historical data, so it’s impossible to measure your progress.)
- Are all of your gadgets talking to each other? For example, do you have Google Search Console, Google My Business, and Google Analytics? Sometimes, each of those requires separate integration into any other tracking system you might be using.
- Are you using ESP software that allows you to properly track all the behaviors you want? For example, some email providers only tell you if a subscriber opens your email. Others tell you if they have looked at it, browsed it, or read it carefully.
- Do you rely on automation for all of your data offerings? If so, you’ll need to check that it’s pulling the correct numbers to the right places.
- Do you have someone who owns all the data collection and display? (Team infrastructure is important to ensure that there are no communication errors or data left uncollected.)
Double check everything! There is nothing more frustrating than having a broken link become ruined.
5) test, test, test.
It is very important to develop and document hypotheses Before launch a campaign. We often think we know how things will work, but only when we see the plan on paper (and document the results) can we really learn and improve.
However, before you spend all of your money on one thing, it’s smart to use a portion of your budget for testing. The testing period will help you 1) make sure things are working properly and 2) show you what works and what doesn’t (or what could work best). This is a surefire way to improve your return on investment without wasting a lot of money off the bat.
5) Monitoring and reporting.
While your measurement approach is unique to each campaign, to calculate your B2B marketing success in terms of dollars and cents, the formula is simple.
return on investment formula
[Return – Investment] / investment
Let’s say you spent $5,000 on a campaign that generated 5 leads, and your average lifetime customer value is $50,000.
$250,000 return (5 leads x $50,000) – $5,000 investment = $245,000
$245,000 (Return – Investment) / $5,000 (Investment) = 49
49 x 100 = 4900% ROI
Of course, this is your high-profile number. You can use a more accurate method of calculating. To do that, here are some calculator tools that may help you:
What matters most in reporting ROI is not just the number you end up getting but the insights you’ve learned. Take the time to research the data and process the results.
- Was your original hypothesis correct?
- What has been particularly successful?
- What has been notably unsuccessful?
The more critically you analyze your results, the better you can improve them next time.
How to improve your return on investment
No matter how successful you are in B2B marketing, there is always room for growth. There are a few things to keep in mind as you continue to refine your strategy:
- Don’t get tunnel vision. It is important to start with a hypothesis, but do not multiply what you want Think You want when the data shows something else entirely. For example, maybe you wanted a fast-spreading YouTube hit (and failed). But if the data showed that your Instagram story conversion rate was astronomical compared to YouTube, you’ll see that this is where you should put your money next.
- Expect the unexpected. Many marketers get frustrated if they don’t get the results they were expecting. (Even if the results are good, you can take a beating of your ego if the results aren’t what you want.) Just know that this is all part of the learning process. Be brave and humble enough to adjust, test and grow.
- Look for missed opportunities. If you’ve tried everything you can think of and you’re still struggling to get the ROI you want, it’s time to get back to basics. Conduct a content audit to evaluate your own content, as well as that of your competitors, identifying opportunities for improvement, message gaps, etc. You may also want to re-plan the customer journey to make sure you’re giving people the right messages at the right time.