ROI Tracking – Justify Your Spending in 2017 (January 2017 – Q1 Series: Quick Start Guide to a Successful Marketing Plan in 2017)
It’s now the New Year and you have a whole whiteboard of marketing campaigns to implement, great content to distribute, and new initiatives to take on. But first you have to face your CFO to get the marketing budget you require. How do you gain his confidence in your marketing activities? Justify your spending in 2017 with insightful ROI tracking.
Importance of ROI Tracking
As the old saying goes, “You have to spend money to make money.” ROI tracking allows marketers to justify their spending by attributing marketing expenses to key performance indicators (KPIs). It will come as no surprise that measuring and proving ROI impacts the success of a marketing organization and their future budget, according to Hubspot’s 2016 State of Inbound Report. In that same report, they found that marketers who calculate ROI are 1.6x more likely to receive a higher marketing budget.
Many marketers struggle with securing marketing resources due to poor attribution and reporting. According to Hubspot, 43% of surveyed marketers stated that proving the ROI of their marketing activities is their biggest challenge. Why is this? Quite simply: A lack of reporting or no access to tools required to do so.
The proof is in the pudding and tracking tangible metrics allows you to visually see what you are getting out of everything you put in. Good reporting not only helps you determine which campaigns were successful for future decision-making, but ensures other teams are on the same page with you as well, including your CFO. This will give you a launch pad for additional campaign strategies.
How to Track ROI
Tracking ROI is a multi-step process, but once you make it part of your routine it will come easily. If available, it might be helpful to assign the tracking tasks to a dedicated marketing analyst on your team.
Step 1: Choose Your Metrics
Choose valuable metrics that align with your campaign objective(s). Using the same KPIs for all marketing activities within a campaign will allow you to comparatively quantify the value of each. Some helpful tips to help you get started:
- Calculate 2016 metrics as a baseline to give you a starting point
- Research industry standards to compare yourself to competitors and see where you stand in the marketplace
- Create SMART (Specific, Measurable, Attainable, Realistic, and Timely) goals for the year, in-line with company/sales revenue goals (this could be a % increase of the previous year’s goals)
- Meet with your CFO to see how success will be quantified (e.g. revenues, profits, etc.)
Define which KPI’s are important to you. Avoid choosing “pretty” metrics, such as ad impressions, versus ones that measure actual ROI success. For example, website traffic may show a blog or social post was successful. Traffic could become leads. Leads can turn into sales opportunities. Opportunities can convert to closed sales. Measuring KPI’s at different stages of the sales funnel will help you determine the cost of leads.
Step 2: Track Your Metrics
As we mentioned before, tracking will not only help justify your spending but also help with better decision-making. Part of a marketer’s job is to understand what’s being undervalued and what’s being overvalued, then adjust accordingly.
Establish how often you are going to track (daily, weekly, monthly, quarterly, year, etc.), then you can pull your numbers from places like:
- Google Analytics
- Your CRM (e.g. Salesforce)
- Your MAP system
So you’ve pulled all of your KPI metrics. What now? Numbers are underutilized just sitting in a notebook without graphics or goals to compare them to. So you need to decide how you want to display and share these important metrics. For example, you can create a dashboard or report every month in Excel or build a dashboard in your CRM/MAP. To get the most out of your KPIs, make sure your deliverable is easy to digest and shows how your metrics are progressing over time. “Over time” being the operative phrase here: this allows you to see what worked, what didn’t, and if/when any tweaks or changes need to be made in your marketing efforts along the way.
Step 3: Justify Your Spend
Finally, track your closed sales back to your spending, whether it’s tools like RainKing or campaign spending like paid advertising.
To demonstrate the value and ROI gained from using certain tools, ask yourself questions like:
- How many leads were generated from the tool?
- How much time did your tool save you?
- How much more accurate is your data?
- Have specific metrics improved? (e.g. email deliverability)
To demonstrate the value of your marketing campaign spending, ask yourself questions like:
- How many qualified leads did I acquire?
- How many event attendees became leads?
- How did elements of my campaign affected closed sales?
- How many MQLs (Marketing Qualified Leads) became customers?
Tracking your ROI will go along way. Not only will it help you secure the necessary marketing budget for future efforts and tools, it will also give you important insight into what campaigns/tools are successful for future decision-making. Be sure to choose meaningful KPI’s that show actual ROI success, use reporting tools such as a CRM or Google Analytics to acquire data, and justify your spending by asking yourself important questions related to your marketing objectives. In the end, ROI tracking results in more effective campaigns, content that converts, and larger future budgets.