We often have clients and prospects quizzing us on their inbound marketing strategy, and in particular its future returns on investment. Naturally, they want to know where their budget is going and when they will see that money again. They’re anxious to achieve their business goals, and keen to have a solid answer in sight.
Unfortunately, there’s no hard and fast answer. This depends on your sector, your product, your team, your available resources… the variables are almost endless. However, we can share a few tips to help you calculate your return on investment from inbound marketing.
Update: This blog was originally published a year ago in August 2016, but we've just updated it with some lovely new knowledge. Check out the end of this blog to learn more!
Everyone would like to think that their company is a special snowflake – and in most cases, I would try to dissuade them from this viewpoint. However, when it comes to marketing ROI, this is in fact the case.
Naturally, your ROI rests heavily on your sector and services. Some B2B may enjoy record profits from making just 10 sales a year, whereas most B2C retailers will need to see thousands of sales on an annual basis just to stay afloat.
However, profitability actually depends on a myriad of things. It involves looking far beyond simple sales figures, and considering every outgoing your business has to deal with. Perhaps your experienced team necessitate higher wages, or perhaps you have to factor in the ground rent on a city centre store. Whatever the reasons, you need to consider them.
Your market and audience demographic will also influence the inbound marketing strategy required to achieve ROI.
Some companies need to make an educational sell (informing and cultivating leads in order to make them sales-ready). If a product has a high cost and some level of risk, this will probably be the case. The solution? Plenty of informative blogs to help leads develop a better understanding of your offering.
On the other hand, many B2B products will require long term customer-supplier relationships. For example, not many companies will change over to a new computing system without planning to spend the next few years with the supplier, as the changeover is time and labour intensive and may even affect productivity for a short while. In this case, lead nurturing workflows are essential to maintain correspondence with prospects.
Before you work out your ROI, first you need to consider how your company will perform each element of the inbound marketing strategy.
How many blogs and other content offers are you planning to publish? Where will you promote it on social media platforms? What’s the approval process for any new content?
Which team members will be doing the work, and are they experienced? If not, you may need to put some time and budget aside for training purposes.
Will these team members be cutting their hours in other areas of the business in order to do the inbound work? As much as we’d all like to, technology doesn’t yet exist to add more hours into the day, so you need to consider who can spare some time in-house. Alternatively, you can get some outside help from an inbound marketing agency.
In order to calculate marketing ROI, you’ll need to set some time aside for analysis too.
What content is most appealing to your audience, and how well do you capture these leads? Are they attracted to your call-to-actions and landing page offerings?
You can perform A/B testing to conduct basic conversion rate optimisation, but even this needs some preparation. To analyse lead generation data at a deeper level requires more time and effort still, but can really help you to understand what’s working and what’s not.
“ABC… Always Be Closing” is a much-repeated acronym among sales teams, and its worth keeping in mind when considering your marketing ROI. It’s essential for your marketing and sales activities to be aligned. There’s no good producing loads of leads that your salespeople are unwilling to engage with, and you have little chance in convincing your board or senior management to continue shelling out on marketing activities if they don’t see any returns.
It makes sense – in some sectors, marketing still has that old reputation of being a negative cost department. You need to prove that you’re providing a valuable service, and supplying sales with quality leads.
In the latest State of Inbound report, HubSpot argued that marketing departments must focus on tracking ROI and proving their performance. Inbound unlocks ROI, and ROI unlocks budget – but if ROI isn’t shown, then budgets will be cut and your inbound marketing strategy will be abandoned.
To get everyone on board, set out a clear growth plan and lay out what can be expected from your inbound marketing strategy over a number of days, weeks and months. Once you’ve given people some explanation of when they should see ROI, they’ll relax a bit!
HubSpot’s own methodology recommends immediately-actionable jobs at the start of a project, to propel growth and produce some fairly immediate results. However, they also state that it takes an average of three to six months to start seeing real results from content marketing. This is fine, so long as everyone knows that this is the case! Don’t promise your boss the world in a week, it will only ever backfire.
So, the bad news first – the ROI struggle is still very real. In fact, HubSpot took a close look when compiling their latest State of Inbound report. When asked about their top marketing challenges, 40% of surveyed companies reported struggling to prove the ROI of their marketing activities.
Don’t worry though, every cloud has a silver (or HubSpot orange) lining. In 2017, a student at MIT published research on the ROI of using HubSpot's marketing, sales, and CRM software. It found that HubSpot implementation led to the number of visitors and leads per month more than tripling within the space of a year. On top of this, 79% of those surveyed saw an increase in sales revenue within one year too. Pretty impressive, right?