Is your B2B organization measuring marketing ROI? For B2B businesses, measuring the bottom-line impact that marketing has is not exactly black and white.
This article will look at how a company can measure the return on investment for their B2B marketing. If you are involved in marketing, one of the most important metrics to track is how much your business makes from each marketing activity.
Simply put, the formula to calculate marketing ROI:
MROI = (Return – Investment) / Investment *100
However, with B2B companies, it can be more complicated to accurately measure ROI from marketing.Since most marketing efforts are ongoing, it’s important to track ROI over specific periods of time. To measure return on investment, there will need to be a specific beginning and end date.
To accurately measure B2B marketing ROI, marketers should follow these steps:
Before doing anything, you must set up tracking to determine marketing ROI. While this may seem obvious, it is important to make sure you have access to accurate data. Set up your Google Analytics and make sure to set up custom reports.
To measure marketing ROI for B2B companies, it’s not enough just to install Google Analytics. You must also determine what is considered an online conversion for your website. For most B2B companies, a conversion from marketing could be a contact form. Secondary goals could be the download of a gated resource, like an e-book or whitepaper.
Customer Acquisition Cost is a metric that is used to track the cost of acquiring and retaining that customer.
After you have everything set up in Google Analytics to start tracking leads, you will need to calculate the Customer Acquisition Cost. You can do this by totaling your marketing spend for a specific period and dividing it by the number of leads generated.
When calculating B2B marketing ROI, many marketers miss certain expenses that need to be factored in. To get an accurate return on investment, make sure to factor in all marketing expenses that go into your sales and marketing costs. Be sure to include the following:
Unlike BC2, B2B focuses on retention of clients. Of course, it is very unlikely that your business will retain all clients over a period of time. Calculating your churn rate will help you get an accurate marketing return on investment.
How to Calculate Churn rate (for revenue) = 1 – (Non new user revenue this period / total revenue last period)
LTV represents the overall net profit you can reasonably expect from your new client, over time, on average.
This step tells you how much a customer is worth, calculating the average value per client your B2B company generates. To calculate this, we take total revenue generated through each channel by the total number of leads generated.
How to Calculate Average LTV
LTV = Average revenue per client / revenue churn rate
Or: (Revenue in time period / # of clients in a time period) / Number of Clients
Finally, to get the ROI of your marketing efforts over a specific period of time, you calculate the LTV:CAC ratio. The Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC)
How to Get Your Final ROI
Marketing to B2B customers can be greatly different compared to B2C customers. Here are a few key differences to keep in mind as you create an ROI-efficient B2B marketing plan:
Measuring marketing ROI for B2B does not come without its challenges. Here are some common challenges for B2B businesses to measure ROI from marketing efforts:
Typical online conversions for B2B organizations are form fills. Most clients go through multiple marketing touch points as part of their journey to ultimately filling out a form online.
To determine each channel’s effectiveness, choose the best attribution model to best analyze which channels role for online conversion. Learn more about common marketing attribution models to use for your B2B business, including first-click, last-click, linear.
Marketing and sales need to be aligned in order to optimize their return on investment.
After a lead becomes an MQL (marketing qualified lead) they are often sent over to the sales team. When marketing and sales teams align themselves on a clear definition of an MQL and SQL in regards to their organization, then marketing ROI will improve.
Follow these marketing strategies to improve your performance for your B2B organization:
Audience research is important for all businesses, particularly for B2B. Create buyer personas that revolve around the buyer’s role or job title in the organization.
In addition to understanding the pain points, behaviors, motivations, you should also focus on the job title, role and responsibilities to their organization.
Because the sales cycle can be prolonged, your marketing plan should use several channels as leads progress from top or funnel to bottom of funnel.
If your B2B audience is not quite ready to make a decision on your company, a gated e-book or whitepaper can be a great way to inform your customer while getting contact information of potential clients.
This allows prospects to take their time to properly understand a little bit more about your business while working their way through the buyer’s journey.
Hire a B2B marketing specialist to ensure your marketing efforts are practical and work with a B2B lead generation specialist to ensure leads are cold called through the hot approach for maximum return.
Inbound marketing is all the rage right now, and for a good reason. The best companies can sustain the toughest of times just by creating an inbound marketing plan to get more leads through content marketing such as blog posts, videos, and white papers.
When creating content, find out what motivates your audience and build it around their needs and interests. Once you’ve got an understanding of the problems potential clients are experiencing, and how your solution fits into the problem, you can find ideas and create content.
In B2B businesses, it’s common for companies to make updates or add new features to products or services. When this happens, be sure to promote the updates on your website and social channels.
Knowing and understanding your customers will help inform your marketing plan. If you center the messaging of your campaigns to focus on customer pain points, you’ll get stronger results. Create campaigns and content ideas that solely focus on solving the pain points of your customers, and tie it into product or service features.
As your B2B marketing plan unfolds, make sure you have the tools to measure the ROI on your marketing efforts. By tracking marketing ROI, you can determine how effective each strategy or campaign is and make updates as needed.
Planful helps B2B businesses track marketing ROI. Use our marketing planning software to improve your plan and campaign performance, and increase ROI.
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