It’s no secret that marketing is key to the success of B2B organizations. There’s just one problem, it can be very difficult to determine how valuable your marketing efforts are.
The truth is that marketing has never been easy to measure for a variety of reasons, including:
- Many variables that affect consumer behavior outside of your efforts
- Multiple touch points that make it difficult to determine where a customer found and interacted with your brand
- Determining what metrics to measure in the first place
For B2C marketers who sell physical products, tracking ROI of marketing can be as simple as determining your conversion rate online. All you have to do is track where your traffic is coming from and then translate clicks/purchases into dollars. That’s not the case for B2B marketers.
In fact, many B2B marketing executives admit that it’s difficult to attribute marketing activity directly to revenue. The problem is the sales process, which can be far more complicated with not every lead becoming a sale and not every sale coming from a quality lead. So, how do you measure your marketing campaign ROI?
There are many ways to measure B2B marketing ROI. It’s not one-size-fits-all and not every effort will translate appropriately for your company, but these are some of the most effective ways to measure B2B marketing ROI:
Single Attribution Model
The Single Attribution Model is probably the most common method used to track marketing ROI. It involves assigning value to either the first or last program that touched the closed deal.
If you were to assign value to the “first touch”, you would be allocating the value of your marketing efforts to the lead source, or marketing channel that brought in the lead.
For example, let’s assume your company held a webinar to bring in new clients. Even if a lead closed a deal a year later, the revenue credit would still be given to the initial webinar to prove its ROI.
On the other hand, when you assign value to the “last touch”, you allocate the revenue to the last thing the lead did before closing the sale.
Let’s go back to the previous example. Let’s say you got a lead from the webinar but after a year of waiting, what finally made the lead close the sale was watching a product demo.
In this example, you would give the revenue credit to the product demo even though the webinar and sales representative had nurtured the lead in various other ways.
When you use the Single Attribution Model, you gain a few benefits including:
- An easy to implement ROI method that is low cost.
- Good insight into early stages of the revenue cycle.
- Straightforward insight into “investment per” lead metrics.
So, when should you use this marketing ROI method? It works well if a majority of your marketing investments are made in lead generation instead of nurturing leads.
Simple Calculation
The second method to measure your B2B marketing ROI is a little more involved, but it is an excellent approach if you have a detailed marketing plan with lots of moving parts. This method most closely aligns with typical B2C marketing ROI measurements. It contains five simple steps and lets you see exactly how each campaign performs:
Step 1: Thoroughly track leads by channel
First, you’ll need to use either your CRM system or an excel spreadsheet to track every single lead back to the channel that brought it to you. A good place to start is by looking at your B2B marketing strategies and then listing out everywhere you’re marketing: your website, Google ads, Facebook, LinkedIn, SEO, etc.
Step 2: Determine channel cost
Once you’ve listed each channel and the number of leads that came from that channel, you’ll want to determine how much money you spent to market on that channel.
Don’t forget to include the hourly cost of managing or executing each channel alongside the hard media costs. For example, the total dollars for a Google advertisement would need to include the hourly rate to create and manage the ad as well as the actual cost of the ad.
Step 3: Determine average client value
Next, you’ll need to determine how much revenue the average client earns your company over twelve months, or whatever period of time your interested in measuring. This will allow you to assign a single dollar amount as the worth of each client.
Step 4: Determine sales conversion rate
Every lead has the potential to become a sale, but not every lead takes that step, which is why you need to determine the conversion rate of each lead. You’ll need to talk to your sales team for this number to see how many leads turn into revenue-generating clients.
Step 5: Calculate “Revenue Number” and “Cost per Lead”
The final step is putting it all together to determine ROI. There are two numbers you’ll want: The “Revenue Number” and the “Cost per Lead.”
The “Revenue Number” represents the revenue, in dollars, that a qualified lead is worth to your sales team. This is determined by multiplying the average client value (step 3) by the sales conversion rate (step 4).
- Average Client Value x Sales Conversion Rate = Revenue Number
“Cost per Lead” (CPL) is the dollar value associated with gaining a lead. It’s determined by dividing the channel cost (step 2) by the total channel leads (step 1).
- Channel Cost/Total Channel Leads = Cost per Lead
How to measure your B2B marketing ROI
To find your B2B marketing ROI, you’ll want to compare your Revenue Number and CPL for each channel.
If a channel produces a CPL equal to or below the Revenue Number, you can register positive ROI.
However, if CPL is higher than the Revenue Number, you’re losing money.
It’s recommended to use this approach if it’s important for you to know exactly how successful each marketing channel is to your bottom line.
The Sales Funnel Approach
The final method to measure your B2B marketing ROI is the Sales Funnel Approach. This method requires you to be constantly aware of where each lead is within your sales cycle so you can better determine which marketing techniques keep your leads engaged and driven towards the sale.
To successfully use this approach you’ll need marketing automation software such as Hubspot, because it will allow you to track and monitor every step of the sales funnel while providing you valuable insight.
To learn more about using HubSpot, contact KeyScouts.
In particular, you’ll need to pay attention to a few key insights at every step in the sales funnel process including:
- Engagement Rate: The number of prospects and the rate at which they engage with your marketing channels
- Lead Conversions: The number of prospects that you convert into a lead
- Lead Pipeline: The number of leads that end up in your sales funnel pipeline
- Sale Conversions: The number of leads that you convert into a sale/client
- Total Revenue: The total revenue generated from closed business
These insights will provide you with the “big picture” overview of your customer’s journey through the sales funnel. This will ultimately help you identify trends or patterns that develop around particular conversion points, media consumption, channels, or sales tipping points. You can then use this data to update your B2B marketing campaigns to ensure maximum ROI.
For example, let’s say you’re trying to determine the effectiveness of your Google ad campaign on leads that have already visited your website and interacted with your sales team. At this step in the sales funnel, you would want to look at the number of leads in your pipeline as well as the number of sales made after viewing the ad to determine ROI.
On the other hand, if you’re earlier in the sales process, ROI might be determined by how many prospects became a lead after viewing the same ad. In this way you assign value based on where a customer is in the sales process.
Measuring the ROI of your B2B marketing efforts is a complex undertaking. The key is to understand which method most suits your business and then implement it accordingly.
If you’re ready to improve your B2B lead generation and your ROI, contact KeyScouts or download our ebook: "Measuring The ROI Of 'Unmeasurable' B2B Marketing Activities: The Complete Guide".
Ready to contact KeyScouts?
