Now, more than ever, companies want to know if all of that time, money, effort and other resources being put towards B2B marketing are being used as effectively as possible. We all deserve to know this information but it isn't always easy to calculate B2B ROI for marketing. Here are a couple of quick calculations you can do to give you a general sense of where you're at as far as ROI for your B2B marketing goes.
Basic Marginal ROI
This is a fun and easy ROI formula that glosses over a lot of important details. It doesn't take into account the possibility that your sales people could be putting in overtime, your product got better, or any of the other factors that may have influenced sales growth. Still, it's a good overall metric to use as an estimate. To calculate your MROI:
(Sales Growth - Cost of Marketing) / Marketing Cost = MROI
For example, if your sales grew by $100,000 and the cost of marketing was $25,000, your marketing ROI would come out to be 300%
Marketing Campaign-Specific ROI
To really see the effect marketing has had on sales, we recommend excluding the average growth over a worthy period of time. For instance, if sales consistently grows 8% year-over-year and then you start a marketing campaign, your calculation should exclude the 8% growth. This will help keep variables consistent and give a more accurate measure of what the marketing efforts contributed.
(Sales Growth - Marketing Cost - Average Organic Sales Growth) / Marketing Cost = ROI
As an example, say your sales grew by $200,000, the cost of marketing was $50,000 and your average sales growth was 10% prior to the marketing campaign (10% of $200,000 = $20,000). The marketing ROI would be 260%.
Things to Consider
These ROI formulas are decent but they still don't give you the entire picture of the return on your investment. These formulas don't take into account the fact that marketing is a long-term, multi-touch process that gradually leads to sales growth. You won't see immediate results for all of your marketing efforts. We tell all of our clients not to expect noticeable results from their B2B marketing campaigns until 3-6 months after the campaign has been implemented.
Remember, your goals should be to maximize both profit and MROI. The difference is subtle, but you can compare it to being efficient (obtaining high MROI) vs being effective (driving maximum profit and long-term value). Maximizing profit isn’t a simple matter of shifting marketing investments from low-ROI to high-ROI activities.
Schedule your free strategy session with one of our experts and find out what you can be doing to be more efficient and effective when maximizing your profits and ROI.