In todayís clatter of digital marketing, you need to find a way to stand out from all the noise. Like many companies, you may be producing a lot of content, posting on social media and publishing email newsletters. It takes a lot of effort to be heard, and it may be costing you a lot of money, too. Understanding your marketing ROI (return on investment) is a good first step in determining the effectiveness of your current marketing campaign.
As discussed by Patrick Hogan of Tenfold in his article, ďThe Extreme Importance of Understanding Customer Acquisition Cost,Ē the technology that allows for personalized marketing has also made marketers more aware than ever that itís easy for a customer to gain a lot of information and get far in their buying decision without a marketer having direct contact with them.
Are you looking to have decision-makers think of your company first when itís time to invest? Make sure to produce effective content that adds value and demonstrates how you can solve their business problems. You also need to find channels for your content that puts it into the path of your target audiences at the right time and the right place.
All of these marketing efforts require meaningful investments of money and human resources.† It is very important that you have a clear picture of whether your current marketing strategy is cost effective, and if itís producing the results you expect. The number one question for most marketers is Ė ďare my efforts resulting in a gain of new business, and are these customers sticking with my brand for the long haul?Ē
In order to make your marketing strategy more effective, you need an accurate measure of it, first. Thatís why you need to measure your marketing ROI, which gives you an idea of what you are spending to bring in a single customer.
The basic calculation. You can get a broad view of your marketing ROI by simply dividing all marketing costs by the number of customers you brought in with those efforts. The problem with this approach is that it assumes that all customer acquisitions are equal and that marketing costs are limited to items like your list purchase, automated email service provider subscription and graphic design.† This calculation will not weigh the difference between a customer that will make a purchase every six months and one that will have a standing weekly order, nor does it take into account the new social media director you just hired to manage your sprawling social media marketing efforts.
Taking more into account. You can create a more comprehensive calculation of your marketing ROI by including more areas of spending. You can add in that social media director and your specialized marketing software. In a B2B marketing strategy, you can include the following in your calculation:
- Marketing costs (all digital and traditional marketing costs)
- Marketing team salaries
- Professional consultants
- Overhead costs
Customer value. Even when adding in a more comprehensive marketing cost calculation, thereís still more information that can refine your understanding of marketing ROI, and thatís customer value. Thereís a big difference in marketing ROI between a one-time customer and one that buys from you regularly over a 10-year period, or a client whose life time value is $10,000 and another whoís life time value is $100,000.
To get a clearer picture of customer value, start with a simple calculation: multiply the annual profits you receive per customer by the average number of years your company has served the customers. Take this total and subtract the initial customer acquisition costs.
Improving Your Marketing ROI
Now that you have a better idea of what itís costing you to acquire a new customer, you can begin to refine your marketing strategy to reduce costs and bring in more new desirable business (high value clients).
Get to know your target audience. Who are your buyers? Develop a few buyer personas, based on their job titles, role in the decision-making process at their organizations and a few other factors. Having a few buyer personas helps you market better by giving you a picture of who youíre trying to reach. Knowing who your target audience is, what challenges theyíre facing and how your product or service might help their company is critical if youíre going to produce content that pulls them to your company.
Identify your best channels for reaching your audience. Thereís a lot of new marketing technology and more is becoming available monthly. It all promises great results for your marketing efforts. Youíve got to weigh these channels and determine which produce the best results for your budget. You need to know where your buyer personas hang out on social media so that youíre not investing a lot of resources in Facebook ads, only to find out that your target audience spends a lot of time on LinkedIn.
Get to know your marketing ROI for your channels. You can drill down your marketing ROI further to determine how each area of your strategy is faring in delivering customers. Social media is the flashy new kid in town, but simply donít assume itís outperforming more traditional marketing channels. Calculate the return youíre getting on various marketing channels and use this to inform how you publish your content.
Use telemarketing to improve your marketing ROI. Telemarketing is not only a tried-and-true traditional marketing method with a consistent and reliable ROI, but it can also help you refine your digital marketing campaign. Through a personal conversation with a potential buyer, you develop a personal connection that is more difficult to achieve with a social media posting or an email newsletter. You can also gain valuable information for your other marketing channels:
- Identify all the decision-makers involved, which can be extensive in a B2B purchase
- Understand the organizationís decision-making process
- Find out where they are in the process, and when they expect to make a decision
- Determine their budget availability
- Hear about which of your competitors theyíre considering and why
- Talk over any reservations they may have about using your product or service
These conversations can help you better shape the content you post on social media, improve the timing of your email newsletters to where they are in their process of making a decision, and find out how they prefer to receive content from your company. The opportunity to receive immediate feedback from your prospects is a valuable component of an effective marketing strategy.
Get a clear picture of your marketing ROI. Access the Blue Valley Telemarketing ROI Calculator and youíll be better-informed for refining your marketing strategy. After youíve calculated your marketing ROI, letís talk about your strategy and how you can gain new customers with a better ROI.