It should come as no surprise that the return on investment (ROI) marketing metric should serve as your true baseline for success.
At the end of the day, marketing has to drive revenue. However, many businesses struggle to connect marketing to revenue due to lack of time, resources and data.
Companies who measure their marketing success well are able to answer questions such as:
- Where do my most profitable new customers come from?
- What channels are converting more effectively?
- Am I paying too much to acquire new customers?
- How many leads am I getting in return for my marketing?
- How many of these leads are converting?
- Can I increase my marketing spending to get more leads?
So where do we start?
Formalise your sales process
We’ve seen many small businesses utilise a Spreadsheet to record and track each lead in their sales pipeline, but we’re here to tell you this approach is messy and unproductive.
We highly recommend implementing the use of a CRM. We prefer Hubspot which offers a free version to get you started, but there are several CRMs out there that will help get your sales process on track. A CRM will help you gain a better picture of how your sales team are moving leads through each stage in the sales process, identify where customers are falling through the cracks and quantify them to determine your most valuable opportunities.
A CRM also helps improve the productivity and efficiency of your sales team by keeping important customer information all in one, easy-to-access place, providing them reminders for following up with customers, outlining a formal sales process for them to follow and improving communication between key stakeholders in the sales process.
Map out your sales process
You can think of your sales process as a map that guides your sales team on the steps it takes to convert a lead into a customer. Mapping this out ensures your lead generation efforts are not going to waste.
Identifying the stages that matter most to your business will allow you to focus on the activities that bring the most impact.
Your sales process is really going to be unique to your service and your business, but here is a typical 7-step process:
- Connect and qualify leads.
- Research the company.
- Give an effective pitch.
- Handle objections.
- Close the deal.
- Nurture and continue to upsell.
We highly recommend reading through Hubspot’s ‘Ultimate Guide to Creating a Sales Process’ and working through this with your sales team.
Track your leads
Leads are the lifeline of any business. They’re not only profitable, but they help you understand what works (and what doesn’t) in your sales process.
Keeping track of your leads is key to measuring your marketing’s success. The more information you capture about each lead, the more informative your reports will be and the more informed decisions you will be able to make when it comes to marketing spend.
Here’s all the information you should be capturing for every lead (ideally in your CRM):
- Contact information
- How they heard about you (Google Ads, Social media, referral, etc.)
- When you last contacted them
- What the next follow-up action is
- What the potential deal/sale size is
- Estimated deal closing date
- Your notes and those from other members of your team
Measure your ROI
Now that we have all of this data at our fingertips, we can start to calculate our Return-on-Investment (ROI).
Let’s say we’re trying to measure the ROI of a recent campaign. We’ll need to know the following things:
- Number of leads: How many people who saw the campaign converted to a lead?
- Lead-to-customer rate: What percentage of leads became a customer? If 16 out of 100 leads become a customer, your lead-to-customer rate would be 16%.
- Average sales price: The average sale those 16 customers converted into.
- Cost or ad spend: How much did you spend on creating and promoting the campaign? Here, you can factor in costs including ad spend, hourly wages of people who put time into the project, or costs related to producing content.
Then we do the math:
(((number of leads x lead-to-customer rate x average sales price) – cost or ad spend)÷ cost or ad spend) x 100.
With the above example, this would be:
(((100 x .16 x $500) – $2500) ÷ 2500) x 100 = 220%
Consider other important metrics
Measuring key marketing metrics should be an integral part of your marketing strategy. Getting to the people and journeys behind the numbers delivers insights that help you optimise your sales funnel and direct investment into the most successful methods more intelligently.
Here are some key metrics we recommend tracking in addition to your marketing ROI:
- Customer Acquisition Cost
- Cost Per Lead
- Lead Close Rate
- Customer Lifetime Value
- Revenue By Channel
- Customer Retention / Turnover Rates
It’s important to continually evaluate and improve your efforts. By monitoring the above data, you’ll gain perspective and insight to help improve your customer experience and you’ll have the right information to make better business decisions.
If you are interested in learning more about using Hubspot or identify key marketing metrics you should be tracking to achieve your sales and marketing goals – get in touch below. We’re here to help!
Let's work together
We would love to chat with you about our method, and how it can help you find your customers and grow your business.
So call us on 0490 493 268 or send us a message. We will respond within one business day.