Sometimes, it feels like the marketing world is one acronym after another — that can get a little...
When your boss asks you to prove marketing ROI, it’s easy to hear alarm bells ringing. That’s why I'm explaining the five simple steps to calculate ROI from your marketing campaign using a fire emergency analogy (which I'll warn you in advance, it becomes cheesier and cheesier as the blog moves along).
From talking to your team to making an effort at maths, there’s much involved in calculating marketing ROI — yet, there’s more reward that comes from it.
- Establish marketing goals
- Adopt an analytics platform
- Use a formula
- Ask for agency support
- Test tools
What is ROI?
Before I delve into the ‘doing’ portion of this post, it’s worth quickly exploring the concept of ROI.
A return on investment is exactly what it says on the tin — getting some money back from an activity in return for what was spent creating it. Hopefully, you’re getting more money back than you put in.
So, in the case of a pay-per -click (PPC) campaign, we may have invested some money directly into an ad campaign and some money in the hours and labour spent running it. For this activity to be profitable, it must yield a return.
Generally, a good ROI is at least a pound for every pound spent.
1. Establish marketing goals
Setting campaign goals and expectations is paramount for reporting pleasure — and I'm not being dramatic here. It should be the first thing you engage in when approaching a new campaign.
Imagine implementing every other step to follow on this list, only for your senior to say they saw an entirely different story.
Crossed wires regarding ROI is the equivalent of a burning building. If you’re careless about communication, nothing will be left of the campaign except for its charred remains. You’ll have wasted time, money and energy on planning and executing a marketing strategy that never had a clear purpose or plan. Awkward.
So, to fireproof your marketing activities, you’ll need to establish some benchmarks. Ask yourself:
- What financial result are you aiming for?
- What’s the ultimate budget?
- Are there any non-financial benefits to consider?
- What’s the project’s timescale?
Now, I'm not saying the answers to these questions are easy. In fact, you might have a few frustrating boardroom meetings before you finally nail it. Yet, pinning down some unanimous objectives is half of the reporting battle, giving you some golden rules to follow.
The more you engage in ROI best practices, the easier it will be to determine the goalposts.
So, in the words of Nike, just do it. Seriously. There’s a lot less smoke, a lot more satisfaction and a really great chance to impress others.
2. Adopt an analytics platform
So, you’ve set your sights on something, now it’s time to pick a platform that will allow you to pursue it.
For the purpose of this blog (and because we’re HubSpot’s friend), I'll run through HubSpot’s analytics, insights functionalities and how to use them in marketing campaigns.
(Yes, you can do similar — but less sophisticated — things with other tools, but just don’t tell us about it).
To revisit the firefighting analogy, investing in HubSpot’s Marketing Analytics & Dashboard Software is like buying a top-tier fire extinguisher. It quickly smothers flames and puts an end to emergency scenarios.
So, when your boss asks for a report on their desk after lunch or signals for a specific figure in front of what feels like the entire office, you no longer need to panic.
You can extinguish these all-too-common marketing manager emergencies by logging on to your trusty software and pulling up the desired data. No sweating. No blushing. No crying in your car at lunch.
In HubSpot, you can set your own metrics, automate reports and keep a close watch on your website, all in one place. This makes calculating ROI easier so you don’t have to transfer data between a web of systems and excel spreadsheets. Yet, it also builds a bridge between you and the rest of the team by granting others collaborative access.
It’s great for giving off the cuff information as well as producing personalised insights tailored to your agreed marketing goals. Basically, you’ll wonder how you ever lived without a robust analytics platform.
3. Use a formula
So far, you’ve taken the time to have a conversation with your team and adopted the help of an automated platform. But you can’t escape doing some hard work when it comes to calculating your marketing campaign’s ROI.
Well, maybe you can if you skip to the bottom of this blog post.
To figure out if your marketing campaign is successful — at least in terms of the metrics you want to measure — you’ll need to produce a formula to help you work it out.
Formulas protect your interests during a campaign, acting as the preventative measure against a total meltdown. It’s the fire exit signs, the laminated safety literature, the mandatory health and safety courses and the flight attendant that talks before takeoff.
Everyone loves to roll their eyes at this stuff when danger is at bay. In reality, these measures save lives when push comes to shove. Marketing formulas save marketing campaigns.
Yes, this does mean there's some math involved in calculating ROI. But marketing formulas are more like basic algebra than advanced trigonometry, once you understand them. Here a few examples:
- Conversion rate (CR): (Number of conversion/Number of clicks) x 100
- Click-through rate (CTR): (Number of clicks/Number of views) x 100
- Return on investment (ROI): (Total Revenue - Total cost)/Total Cost
Essentially, you’ll only ever need to work out a marketing formula once, meaning when you’ve cracked the code, you can use it for a lifetime.
Getting a grip on marketing formulas helps you to contextualise data so the streams of numbers churned out by an analytics platform can finally make some sense. By using marketing formulas, you can confidently shed light on even the most complicated tables and trends.
Alas, it’s no use in printing out fancy reports with diagrams and pie charts if you can’t explain its relevance to your ROI. I'm not sure if it’s worse to turn up empty-handed to a meeting or dish out data to your team you can’t explain. Either way, information without intelligence is not the way to go.
4. Ask for agency support
If you’re a marketing master, you might get away with skipping this step.
Then again, if you’ve stuck around until this point in the blog, there’s a good chance you’re a fine creative, a willing worker and a committed manager — but maybe not yet a master at your craft.
As an Elite HubSpot partner agency, it’s our job to find out about updates and teach our clients how to use them, along with all of the other services we offer.
Agencies can help with the analytical side of things, showing you the ways HubSpot and other marketing tools work so you can feel more confident in your ROI reporting.
What’s more, they can even assist in report calls, helping you to see first-hand how to deliver data in a clear, concise way.
When it comes to this level of reporting, you need to introduce an expert to your team so you can make the most out of your newly purchased platform and sharpen your skills.
Asking for agency support isn’t giving up, admitting defeat or shoving off your work onto somebody else. It’s a way to better equip yourself and your team to prove a marketing department’s value and a sure way to enhance some of your marketing activities by outsourcing them to specialists.
If a fire broke out you wouldn’t idly wait for the fire department to arrive. You'd attempt to diminish the fire before better-equipped experts arrived on the scene.
So, if you haven’t guessed yet, we’re hunky, strong, strapping firefighters (if I do say so myself).
5. Test tools
By this point, you’ll be able to calculate ROI for any marketing campaign (and do a whole host of other things thanks to HubSpot’s genius platform). But for those who are in the market for making things simpler, you shouldn’t stop here.
It’s always worth testing new tools to see if you can save time and money when reviewing marketing performance. There are countless free tools to help with delving into marketing data and even more to help generally in marketing campaigns.
What your marketing department or senior staff consider a good ROI might be different, depending on the activity in question. The important thing about ROI is this: it has to be quantifiable.
This means you can’t say to your boss “I think this email is doing well” or “It feels like we’re getting a lot out of this new marketing tool.” Instead, you need to share facts and figures to get the green light from your boss and the go-ahead for new projects.
If you want people to buy into an idea or praise you for something that’s already working, you need to tell them in simple terms. ROI isn’t about thoughts and feelings (what we might otherwise call hippy-dippy or fluffy talk). It’s about profit and proving something’s worth in cold, hard cash.
Saying something like “There’s a good case to be made for paying for this marketing tool after its free trial ends since, on average, it’s helped us to shave X minutes from our writing process in the last X months” is a much more effective way to put your point across.
Inevitably, some tools you try won’t quite make the cut. But others could become part and parcel of your company’s tool stack.
Automatically generate answers to your metrics with our conversion calculator
Baking soda, salt, pan lids and tea towels are all handy tools you can use to put out a fire. And it’s at this point that we’re sure you’re getting sick of my fire analogy.
Before you go, a tool I know you’ll instantly find value in is our Conversion Calculator that eliminates the ‘hard work’ portion of calculating marketing ROI.
Instead of manually calculating marketing formulas, you can use our calculator to automatically generate answers to any set metric. Try our Conversion Calculator for free by clicking the link below.