How To Calculate Marketing ROI For New Business
Measuring return on investment is never a simple, straightforward task. For recruitment companies, it is very easy to focus on repeat business and client retention, but without the right amount of thought into why investing in marketing in order to attract new business is beneficial.
It’s understandable. Particularly in the post-pandemic world we are living in, many organisations are reluctant to spend money that they don’t feel is absolutely necessary.
One key thing to remember is: for business growth, investing in marketing is always necessary.
Where to start with marketing for new business
B2B marketing strategies can be executed organically, but this often takes a long time, as well as a lot of effort and consistency. However, when it comes to investing in your marketing function – such as hiring a new marketing employee, or setting a budget for software or PPC campaigns – you’ll see a noticeable difference in a short space of time.
Depending on where your business is currently at with its B2B marketing, whether it’s something completely new to your company or something that needs to be developed and executed by your existing marketing team, you need to consider the following:
- Team members - is your marketing function serving your company properly? Are you seeing the results you’d been expecting, or do you need an extra pair of hands to help share the workload? Investing in your marketing team might be where you need to start.
- Outsourcing - does a digital agency handle certain aspects of your marketing output? Do you outsource to designers or freelancers for help with content? If not, it may be time to invest in these things in order to take your marketing content and your overall B2B strategy to the next level.
- Paid campaigns - is any of your content currently being sponsored on social media? If not, why? Investing in PPC and paid ads is one of the quickest ways to target specific people and businesses online with your product or services.
- Software - should you be investing in automation software to streamline your B2B marketing processes? Certain software can seem as a “nice to have” for businesses that are looking to keep expenditure low, but the ROI for streamline certain marketing tasks and campaigns can say otherwise.
Where to begin with marketing ROI
What is considered a “good” return on investment varies depending on your specific industry, strategy and distribution channels. The main goal when measuring your ROI should be to make more than a pound for every pound you spend.
When it comes to PPC, you have quick and easy access to ROI data as it is tracked automatically, meaning you can see your return specifically in comparison to what you’ve spent. Similarly, Google Ads give its users easy access to data to see how their ROI is tracked, which is why Google itself is so open about their 800% ROI benchmark.
Creating your own benchmark specific to your company is simple: look at your past campaigns and what you’ve spent, and forecast. If you know what kind of a return you get for spending £100 on a paid ad, use this data to predict what kind of a return you could generate by spending £200, £500 or even £1,000 on paid ads going forward. But, be realistic – if your past data doesn’t show a noticeable ROI, it may be time to rethink some of your current marketing tactics or channels.
Using a formula to calculate your marketing ROI
When it comes to generating new business or making new deals, you want to be able to see what your marketing return is to know how much you should be spending on B2B marketing each year.
The easiest way to do this is to integrate the ROI of your marketing into your overall business spend calculation. For example, you can take the new business numbers, subtract the marketing costs, and then divide by the cost of your marketing, too.
New business – marketing cost / marketing cost = ROI
Therefore, if you generate £5,000 in new business, and you had spent £1,000 on marketing, your ROI would be 400%.