🙋🏻♂️ Raise your hand if you’ve ever created a marketing strategy like this: “Ooo I heard that blogging was a good idea so we need to write one blog a week and podcasts are a thing now so we need to be on podcasts and I think we also should try Tik Tok because that’s the hot social media channel.”
I’m sure we’ve all fallen victim to this kind of marketing planning at some point in our careers. but today I’d like to show you a simple and effective way to set marketing goals that will really move the needle for your business.
Projecting Your Return on Investment from Marketing
Here we’re going to follow Stephen Covey’s philosophy of “Begin with the end in mind” from The 7 Habits of Highly Effective People.
What is your annual marketing budget?
If you are finding this question hard to answer, an easy way to solve this might be to look at your marketing spend last year. You can likely find this on a standard P&L statement or perhaps your business taxes. If that solution won’t work for you, now is probably a good time to set a number in your budget for how much you’d like to spend.
According to a study conducted by Deloitte of CMOs, the average marketing budget in 2021 is 11.7% of company-wide budgets. For smaller B2Bs, you might land between 2-5% of annual gross revenue and B2Cs might budget 5-10% of annual revenue.
It is important to have a defined budget for marketing so that you know how to measure the success of your marketing.
What ROI should you expect from marketing?
A typical business standard is 3 times ROI on marketing initiatives. This is easy enough to calculate now that you know your budget:
$90,000 in annual budget * 3= $270,000 ROI
This number can be the top line of your marketing scorecard report so that you always have the bigger picture in mind.
Understanding How Many Leads You Need From Marketing Efforts to Reach Your ROI
Calculating Customer Lifetime Value
In order to determine how many leads we want, we first need to determine the lifetime value of a client or customer. The easiest way to do this is to take last year’s revenue and divide that by the number of customers you or your client have. (This is the quick and dirty way to do it and, yes, it is technically Annual Customer Value, however looking at the same time frame as your marketing budget is helpful and as I said, easier. Please feel free to calculate your actual Customer Lifetime Value if you maintain clients over several years.)
Example: $100,000 in gross revenue from 10 clients is $10,000 per client.
Now you might be thinking that I had one client who was $1,000 and I had another client who was $25,000. In that case, you might want to separate those clients into two separate buckets because you’ll likely have two separate calls to action on your website for those clients.
For example, if we have five clients that purchase our Foundational SEO package at $3,500 and 6 clients who are enrolled in our ongoing SEO program at $5,000 per month, there are very different values for those customers and for those leads. The Foundational clients are easy since that project has a set price of $3500; the lifetime value of those clients is $3,500 if they don’t purchase anything else. Five Foundational SEO clients have annual revenue of $17,500.
The lifetime value for ongoing SEO clients would like more like this:
($5000*12 month)=$60,000 Customer Lifetime Value
Let’s take it one step further to project the annual gross revenue:
$60,000 * 6 clients = $360,000 in annual revenue
Immediately, you can see where you want to focus the majority of your efforts: in the monthly client lead generation bucket.
Next, we want to factor in our ROI from marketing efforts of $270,000 worth of gross revenue from marketing initiatives. So if we take that $270,000 and then divide it by our Customer Lifetime Value $60,000, we know that we need to close 4.5, or conservatively 5, leads from marketing initiatives.
But not all of your leads turn into clients, right?
Let’s account for those leads who aren’t the right fit for your business by looking at your conversion rate.
Find Your Conversion Rate
This is easily determined by dividing the successful number of leads by the total number of leads and making it a percentage.
11 Successful Client Acquisitions out of 14 total leads has about a 79% conversion rate.
Determine Your Goal for Number of Leads
If we divide 5 (the number of leads we want to close) by our conversion rate percentage and then multiply that by 100 we will see that we need 6.33, or conservatively 7, leads to reach our marketing-generated revenue goal of $270,000.
Tracking Your Progress Toward Marketing Lead Goals
Phew, you have already accomplished A LOT by making it this far. Congrats!
The next part of making marketing work for you is to make sure that you’re properly tracking the mechanisms on your website that contribute to these goals. And, let’s be honest, no one has time to do this manually.
Tracking Goals in Analytics
Please tell me you have Google Analytics set up on your website??????
If you don’t, here is a resource for how to add this wonderful and FREE service to your website right now. Please do this one thing if you do nothing else today.
If you do have Analytics installed, HIGH FIVE for you.
The next step is to track website events. In our case, we track sales of website audits and the number of consultations we book for higher-level service tiers.
Take a moment to visit your website and find the specific elements and actions a visitor needs to take to tell you that they are interested in hiring you or making a purchase.
Examples of Conversions
- “Get a Quote” button
- “Complete Purchase” button
- “Contact Us” Form Fill
Reporting on Conversions in Google Analytics
With the elements that you’ve defined, you will need to now set up goals in analytics. Google provides great documentation on all of the various types of goals you can set. To go through each and every scenario in this post would have you running for the hills, however, please do use the instructions from Google or give us a call. We do set up goals and events as part of our Custom Reporting services.
Bringing Your Marketing Reporting Together
You’ve got all of the elements defined and now it’s time to pull it all together!
As one of my favorite SEOs, Dana DiTomaso, recently pointed out at Moz Con 2021, “CEOs don’t care about percent increase in organic traffic. They care about the bottom line and how your work contributes to it.” (I’m definitely paraphrasing there, but the sentiment is the same).
This is so simple and yet most SEOs and marketing professionals don’t report this way!
Well, we heard you Dana and we also put together a Data Studio Template that takes all that we’ve talked about to this point and puts it into a dashboard. 🤩
Determining the Value of Marketing Content - Step 1
If you’ve invested in content creation and marketing content, it is likely that you will have different goals you’d like to measure and report on, and therefore different monetary costs you want to assign to each goal.
For example, a Request a Consultation call-to-action will have a much higher monetary value than an ebook or template download. It is important to have a good idea of where each piece of content or goal you have fits into your marketing funnel so you can set those tracking mechanisms up within Google Analytics.
Because this is complex, it is helpful to again look back at what has worked in the past. Of the last ten leads that you closed, what content did they engage with? For Illuminous Marketing, our videos that demonstrate our expertise really help with the consideration phase of the funnel because in those videos we are demonstrating our clear understanding of SEO.
60% of ongoing SEO clients watched 2 or more videos before they converted into a client. These could be classified as KPIs or micro-conversions.
How to Measure the Impact of Content On Conversions
It’s a complex question that we will answer in Part 2 of this series. However, in order to successfully measure how content contributes to conversions, we can use yet another report template. We really like the one below by Vagelis Varfis within the Google Analytics Solutions Gallery. Add it to your analytics profile so that you have actionable data to work from in our next post on assigning monetary values to micro-conversions.