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4 Simple Steps to Calculate Marketing ROI

Susan Allen

One of the benefits of a well-orchestrated lead management program is achieving alignment between Marketing and Sales. And when Sales is consistent about providing feedback on the leads they are receiving and the results of their follow-ups, we will have achieved the Holy Grail of lead management:  We can calculate the ROI on our Marketing spend. 

Successfully calculating ROI on Marketing

ROI can be as simple as taking the margin on product sold as a result of a specific marketing program divided by total marketing expense for the activity.  We recommend working with some additional data, as well.  Ideally, we use the following information: 

  • Value of new business won. This is where consistent feedback from the sales organization comes in!
  • Average customer lifetime value. This may be segmented by customer type, if that detail is available.  A robust, well-maintained Marketing database will provide the level of detail we need.
  • Baseline value for “brand awareness”. This requires negotiation between Marketing and Finance.  Our clients typically are comfortable with 8% - 10% of overall marketing spend for a tradeshow event, for example.
  • Margin on product sold.

Using these additional data points, we can calculate ROI based upon not only near-term purchases, but purchases anticipated through the relationship with the new customer.  It also serves to remind management that there is value in reinforcing the brand proposition and increasing brand awareness.

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