If you have no idea what kind of ROI your marketing efforts are producing for your B2B company, you’re not alone. In our agency’s experience, this statement especially holds true among manufacturing and construction businesses who have traditionally spent heavily on trade journal print ads and trade shows.
Thankfully, this kind of uncertainty goes away with online/inbound marketing, where everything is measurable. And in 2015, your industrial marketing efforts need to show tangible results that can be measured over time. In this article, we’ll take a look at some key numbers:
- Your specific revenue growth target and associated customer acquisition target
- The number of leads you’ll need in order to reach those targets
- The number of website visits you’ll need to produce those leads
First, set your revenue and customer acquisition targets
Let’s start with the end goal in mind: revenue growth. By how much are you looking to grow your business in the next year? Let’s use a square number for our example and say $2M is the growth target.
And what’s the average value of a new customer to your business over the next year? Let’s say $200,000 for now.
So with a $2M revenue growth target and an average customer value of $200,000, you need 10 new customers in the next year to meet your revenue goals. Pretty straightforward.
Next, set your lead generation target
Time to work backward from revenue and customers. Next let’s talk about the effectiveness of your sales / business development team. On average, what percentage of qualified leads do they close as customers? If you have that data, great. If not, talk to them or take your best guess. For this example, we’ll say 1 in 5 good leads close (20%). So to acquire those 10 new customers, you’ll need to give your sales team 50 qualified leads this year.
Let’s also assume that about 1 in 5 leads generated through your website are truly qualified. Why? Well, realistically, not everyone who reaches out to you will be a good fit. So to acquire 50 good leads for your sales team, we’ll need to find them 250 total leads over the next year (or about 21 leads/month).
Finally, set your website traffic target
Now it’s time to look at your website’s effectiveness. Based on our experience and benchmarks set by marketing software leader Hubspot, an effective B2B website should convert at least 2-3% of visitors into leads. Let’s split the difference and use a 2.5% conversion rate for this example. Time to put those 8th grade algebra skills back to work.
0.025x = 250 (translation: 2.5% of how many website visits will produce 250 leads?).
x= 10,000 website visits over the next year (or 833 website visits/month).
Let’s recap what we now know
- You’re looking to grow revenue by $2M next year
- Your average customer is worth $200K
- Your sales team can close 1 in 5 qualified leads
- We need to give your sales team 250 total leads/year (or 21 leads/month)
- At a 2.5% website conversion rate, we’ll need 833 visits/month to generate those 21 leads/month
Now go do the math for your company. What’s the level of website traffic you’ll need to produce to enough leads? If you’re already seeing that level of traffic, but not the corresponding level of leads, that means you have a conversion rate problem. Learn about how to fix it in chapter 5 of our Hardworking Inbound Marketing Guide for B2B Industrial Companies. If you’re not seeing the traffic volume you’ll need, start with chapter 3.
A perfect model?
So is this model flawless? No, of course not. But it’s a great starting point for using logic and real numbers rather than uneducated assumptions about marketing’s contribution to your company’s bottom line. Now go do the math and get started!