“Marketing’s job is to contribute to revenue generation, not be a cost center for superficial activities with no clear return on investment (ROI).”

– The B2B Social Media Book

It’s time to think about marketing differently

When you hire employees, purchase new equipment or send team members to professional development training, you make an investment. You spend the money because you expect a return on your investment – a reward for taking a measured risk. When you invest in marketing, your expectations should be no different.

Online marketing is a land of measurable data

When we say “measurable”, we mean analyzing how effective your marketing activities are at moving prospective customers into your sales funnel. This means attracting qualified prospects in Google searches, drawing them to your website, engaging them with exceptional, targeted content, capturing their contact information and tracking their engagement with your business until they become customers.

What we’re NOT talking about are website page views, Facebook likes, email opens or retweets. There’s no denying that these kinds of metrics paint a picture of brand awareness and that brand awareness is important. But it’s not part of the ROI formula, so we’ll save it for another discussion.

A simple math equation

ROI is a formula that demonstrates the dollar amount you earn as a percentage of the dollar amount you spend to get it. It looks like this:

online marketing return on investment

Let’s put this in perspective

Let’s say you spend $100K on marketing this year and that investment results in new customers worth $300K over the course of their relationship with you. In this scenario, your ROI formula looks like this:

marketing return on investment formula

In other words, for every $1 you spent on marketing, you made $2 – a 200% return on investment.

So now what?

Now that you know how ROI is calculated, there are two big questions to answer:

  1. How can I attribute those leads to my web-marketing investment?
  2. How do I prove it to the boss man?

While this blog post touches the formula itself, we recently published a Marketing ROI Manual. We wrote the guide for business owners, CMOs, marketing managers and innovators at B2B companies who are more interested in building measurable marketing campaigns that turn dollars into more dollars than blowing marketing budgets on phone book ads and printed brochures.

If that sounds like you, give it a read-through. Click below to download the guide.