Are you wondering if the marketing investment to get more traffic, leads, and sales will pay off? The truth is, that most companies are still not measuring their marketing ROI. Even some of the largest companies are still focused on metrics pertaining to tactical work, rather than benchmarking efforts against a digital marketing ROI calculator. And how do you calculate inbound marketing strategy ROI?
Globally, 41% of marketers confirm inbound produces measurable ROI, and 82% of marketers who blog see positive ROI for their inbound marketing.
Return on investment (ROI) is the most popular financial metric when you need to compare the attractiveness of one business investment to another. This is where top inbound marketing agencies can greatly help in terms of leveraging HubSpot closed-loop reporting to track the ROI of sales and outbound marketing efforts.
Your marketing ROI equals the present value proposition of your accumulated net benefits (gross benefits minus ongoing costs) over a specific time period, divided by your initial costs. It's expressed as a percentage over a certain amount of time; for this example, we will use the equation for a 3-year ROI:
(net benefit year 1 / (1+discount rate) + net benefit year 2 / (1+discount rate) + net benefit year 3 / (1+discount rate)) / initial cost
So, if the initial cost for your product is $100,000, your annual benefits minus annual costs are constant at $50,000 for the next three years, and the discount rate is 10%, your 3-year ROI would be:
($50,000 / (1 + .1) + $50,000 / (1 + .1)^2 + $50,000 / (1 + .1)^3)/$100,000 = 124%)
If that math is a bit much, see the inbound marketing ROI calculator on our site.
The main goal of the digital marketing ROI calculator is to allow you to gauge and forecast the marketing efforts in marketing agencies needed in order to meet your revenue goals. Potential customers should be able to quickly specify and change the variables that are important to them. The best way to achieve this is to use several dynamic sliders to change the variables that must be measured, such as:
Other variables that are unique to each business are the salary of the target employees, the number of employees, and the number of transactions.
A well-designed inbound marketing ROI calculator can be used effectively at any point in the sales cycle. An inbound marketing calculator is a great tool to attract and qualify prospects. Place the Flash-based version on your website or on your laptop so that you can look through the model as you collect and store your preliminary thoughts. At the end of the session, you'll have excellent insight and a preliminary ROI figure that you can use in order to judge the value of the prospect.
If you're starting up a new business, then the knowledge of return on invested capital (ROIC) is very important. It's used to settle on the efficiency of the invested cash in the new business.
ROIC is calculated by dividing the net profit of your business by the entire sum of assets. The amount that's generated out of the calculation isn't the exact ROIC. Cash and investments are to be subtracted from the amount, as these aren't investments in your new business itself. What you get after the calculation is the ROIC from your marketing budget.
ROIC = (Net Profit/Total Assets) - Cash and Investments
Businesses are generally considered a riskier investment, and hence you must focus on having 20% to 30% of ROIC in order to win the interest of investors. If the ROI is low, it means that the shareholders aren't getting enough compensation for their risks.
The quick first steps to measuring inbound marketing ROI are:
For instance, if you make $1,000 per customer each year, and you tend to keep customers an average of seven years, the customer lifetime value would be $7,000. As such, reducing churn rates will result in a large increase in your customer lifetime value and can change the entire trajectory of your sales growth.
“Half the money I spend on advertising is wasted; the trouble is, I don't know which half.” – John Wanamaker
When you start up your site, for a business, online or offline, all your plans and strategies are nothing but a calculated guess, a gamble where you try to minimize the chances of losing. Accurately projecting marketing ROI is an important tool that lets you do the same. Calculating your inbound marketing ROI at regular intervals is crucial to understanding the results that you achieve in your business. Our free HubSpot marketing ROI calculator will act as an appropriate guide for your company to help forecast potential to scale and the investment needed to make that happen successfully.
Use a free marketing ROI calculator as part of your sales process and make sure all customer information is saved. You can use the stored information in order to refine customer segmentation and improve the customer appraisal process. The stored information is also the basis for excellent customer case studies showing the realistic traffic needed in order to achieve this year's sales goals and projected growth rates.