roi calculator

Is your marketing generating leads?

Calculating the return on investment of each of your marketing channels is an important task to ensure you’re perusing the right marketing strategies to gain your desired outcome.

Of course there are many different objectives for marketing efforts, which can include:

  • Lead generation
  • Increase in sales
  • Increase in customers
  • Brand recognition
  • Brand awareness
  • Market share

To keep this guide simple we’re only going to concentrate on the quantifiable goals such as lead generations and sales as it is more complex to evaluate the impact of branding. This may seem over-simplistic, but in the end, calculating the bottom-line ROI is what the MD, CEO and/or Board of Directors is really interested in hearing about.

To get started, download this simple ROI calculator spreadsheet that you can use to calculate the results for last year’s marketing, or see the necessary information to gather for next year’s review.

Step 1 – List of all of your marketing activities and expenses

For simplicity here, let’s look at the yearly expenditure for each marketing activity (but you can add more columns to the spreadsheet to look at each quarter or even each month).

Simply add every marketing channel in here and provide the corresponding expense. It’s up to you to choose cost including or excluding tax but you’ll need to be consistent across all items whichever way you choose.

List marketing activities

Step 2 – How many leads or sales have you generated from each source?

how many leads

In this important step you need to gather all intelligence as accurately as possible as this is crucial for the calculation of the return on investment. Add up each lead that you received from each of the marketing activities over the year and enter them.

Here are a few tips for each of the sources listed:

Email:

For email enquiries that come via your website (from a ‘click to email’ link for example), ask your SEO provider or web developer to apply an ‘event tag’ to any email address online and have this tracked via Goal tracking in your Google Analytics Account and reported back to you on a monthly basis.

Set up a folder where you can save all email enquiries coming in through and count them up at the end of each month, quarter or year.

Online Form:

Similarly any leads that come through a contact form on your website can be tracked and reported on by your SEO provider. They will be able to tell you the number of completed forms and the source of those leads (via SEO, Paid Search or Referrals for example).

Phone Calls:

The number of phone call leads and the source of those leads could technically be provided by the person answering calls for your business (your sales team or receptionist). It is good practice to have them ask the lead how they came across the business. However, this is often not practical and some customers might not remember whether they clicked on a paid ad or an organic listing.

The most cost effective and reliable method is an automated phone-tracking system that can track all sources of marketing by assigning unique numbers to each marketing activity. This is simpler and more cost effective than it sounds and doesn’t require you to change your phone system or pay multiple line rentals. Find out more about call tracking here.

In Person:

Walk-ins or networking contacts need to be accounted for also and that’s what this column is for.

Others/not identified:

Even being equipped with the best tracking systems there are just some leads that have slipped through the cracks and cannot be assigned to a particular campaign or marketing activity.

Step 3 – Estimate sales based on lead value or list sales revenue

Of course, the best scenario would be to have the actual sales data recorded for each lead and marketing activity. However, if you can’t access this information we can use the next best method – estimating the value of each lead and the estimated conversion rate of the total number of enquiries.

The cost of your marketing activities and the number of sales leads are already populated in your spreadsheet. All that’s left for you to do is enter the average conversion rate overall and the value of each lead (the average sign-up value or contract), which your sales team should be able to provide.

ROI calculation

Tip: You can modify the spreadsheet and formula to represent a different conversion rate and average cost per lead as the quality of phone enquires might be higher than that of an online form enquiry or quote request for example.

Step 4 – Review return on investment figures and percentages based on estimated sales

As per our example in the download, we estimated profits based on the average lead value of $2,000 per customer, and based on the assumption that we can convert 50% of all leads coming through.

What is left to do now is to review the profit figures and ROI percentage calculation and decide which form of marketing is working best (and which ones are not working and can be dropped next year). In our example, conventions provide a very good return on investment with 500% followed by radio and online marketing. Unfortunately magazine advertising hasn’t provided as much value but at least we didn’t lose any money here.

Review expenditure

In Summary

As budgets are tight and marketing professionals are under pressure develop marketing activities that provide results, this form of analysis becomes crucial and can become your essential guide for future budgets and a tool to forecast leads based on existing investments. We’re often asked by our clients to help evaluate the ROI of their online marketing and other marketing activities with the call tracking solution.

Download the spreadsheet below and start tracking the ROI of your marketing campaigns.

Source:: http://www.learnmarketing.com.au/