"But what is the ROI of your programs?"
Whether you're starting a new marketing job or needing to go back to the drawing board after last month's QBR's, "But what is the ROI of your programs?" will be your North star. Chris Walker and Tom Wentworth tore this question down at our Refine Labs' July Expert Session. Here is what you must know.
Now more than ever, marketing programs and budgets are being closely scrutinized. With more pressure, smaller budgets, and leaner teams, we understand the importance of showing ROI. To help, here are key metrics we use with our clients to help give you a clear lens into your ROI:
1. Total Inbound/Pipe™ Revenue Closed Won to Marketing Spend: Calculate the total inbound/Pipe™ revenue closed won divided by the total marketing variable spend (excluding headcount) in a quarterly lens. This provides a clear picture of the return on investment for every $1 of marketing spend, including events, sponsorships, paid media, and content syndication.
2. Marketing Cost to Acquire a Customer (CAC): This metric includes all marketing overhead costs like salaries, benefits, and marketing tech. It gives a complete picture of acquisition costs and helps in understanding the efficiency of marketing spend.
3. Marketing CAC Payback Period: This metric indicates how long it takes to break even on each new customer based on the marketing overhead spend to acquire them. It provides insights into the efficiency and effectiveness of marketing investments.
4. Advertising (Ad) CAC: This metric measures how much is spent on paid media to acquire a customer. It does not include the total cost of marketing and sales overhead.
5. Ad CAC Payback Period: Similar to Marketing CAC Payback Period, this metric indicates how long it takes to break even on each new customer based on the paid media amount spent to acquire them. It provides insights into the efficiency of paid media investments.
6. Contextualizing Spend: It's important to put investment in the context of performance and show efficiencies, such as improving ROI. This involves showcasing a clear relation between spend and results/performance, rather than just presenting spending figures without context.
7. Benchmarking Ad CAC Payback Period
Benchmark the Marketing/Ad CAC payback period between six to nine months. This benchmarking helps in evaluating the efficiency of marketing and advertising investments and provides insights into potential growth opportunities.
These will help you get a clearer picture of what's working and what's not. If you're still stuck, we've got tons more insights and playbooks in the Vault.