Alex Miles
ROI or return on investment is a metric used to measure the profitability of an asset. It simply refers to measuring the results of a particular activity during a specific period of time against the initial resources first invested in said activity. When it comes to marketing, the ROI compares the amount of money spent on a campaign to the amount of revenue you have gained... Simple? Not quite!
ROI is an elusive figure for most building product businesses and getting it wrong can lead to catastrophic consequences. With HubSpot, that figure is attainable in seconds... In this blog, we learn the role of ROI in a good marketing strategy, the different ways in which it can be interpreted, and the features included in HubSpot that can help you gain clarity when looking at your marketing performance.
How To calculate the marketing ROI of your building product business
If a company spends £10,000 on marketing and earns £20,000 as a result of those marketing efforts, the ROI would be 2:1. This means that for every £1 spent on marketing, the company has earned £2. If we deduct the marketing cost, the net ROI would be 1:1. With every £1 spent on marketing, the company reaches £1 in net income. The goal of any business should be to, at least, make a pound for every pound they have spent.
When it comes to calculating marketing ROI, there is a simple formula you can follow. That formula involves your current number of leads, your lead to customer rate, your average sales price, and the cost of your paid media strategy. Once you have been able to gather those metrics, you will need to multiply your number of leads, your lead to customer rate, and your average sales price, and divide it by your spending.
I know... maths! They are not always relatively straightforward and, unfortunately, building product brands struggle not with the formula itself, but with the inability to gather the numbers they need to calculate their ROI. Surprisingly, a large number of companies are not aware of their current number of leads, their lead-to-customer rate, or their average sales price. They might not even know how much they are spending!
Unfortunately, this case is more common than we think... Many companies find it tricky to understand how their marketing investment is performing, so they see it as a money drain. But, not all is lost! There are different tools in the market that can allow you to get deeper insights into your business, making the task of figuring out your ROI less about guessing, and more about assessing!
Beware of Vanity Metrics
But, first, let's understand the importance of ROI and the different metrics that you should take into account. Marketing performance can be measured through various metrics, including reach, impressions, visits, customer lifetime value, etc. But not all metrics are as relevant as others. Before you try to calculate your ROI, you need to understand what vanity metrics are and why you should not focus on them too much.
Vanity metrics, often confused with return on investment, are visual metrics that you may get, such as increasing followers on your LinkedIn account or influx of likes on your company's Instagram posts. While metrics such as these may look good on the surface, they're not as reliable as others when it comes to determining business success. Vanity metrics can change over time and don't reflect what businesses are doing to achieve their goals.
If you only focus on these metrics, you will find it extremely difficult to track progress and make confident decisions for future marketing campaigns. Unlike vanity metrics, ROI can determine which parts of your marketing efforts are performing the best and exactly how they reward you. By understanding your business's financial health, you can make informed decisions about your strategy and budget.
This information can help you stay afloat during tough times and make the best choices for your long-term success. The key is, as you can see, not to just report, but to report on the right data, that you could have instantly available if you were using the right tools.
How HubSpot Can Help you Define Your ROI
Metrics are, indeed, the backbone of an ROI report, but you need to produce a report based on them. Excel has been, traditionally, the tool used by marketers to track and calculate ROI regularly, but it is incredibly hard to keep updated and, most often than not, requires advanced knowledge of the software before good quality reports can be produced.
With that in mind, HubSpot has developed a wealth of tools to help you track and manage your return on investment, making it much easier to achieve your marketing goals and make the most of your investment strategies. HubSpot provides valuable data on your marketing and sales efforts, so you can make informed decisions about how to grow your business.
Here are some examples of the tools available at HubSpot that will help you get the most out of your business.
Marketing ROI Through the Campaign Monitor
Campaigns is the feature that HubSpot offers for users to associate assets to a single marketing effort. With HubSpot Campaigns, you can plan and optimise scalable campaigns, all from one place. The campaign management tool allows you to keep track of your marketing assets in an organised way. This feature is available for all Marketing Hub Professional and Enterprise users and allows them to learn about the full impact of their marketing strategy.
This tool will enable you to see precisely how well your campaigns are working and how much revenue they are generating for your business. HubSpot calculates ROI based on your deals on the very same platform. Deals marked as closed-won will be included on your ads dashboard if they are associated with contacts in the lifecycle stage of customers who were attributed to your ad campaign.
Sales ROI through Forecast Reporting
Real-time sales reports can help you set and meet goals. This tool allows you to see how much your business is making and understand how it's divided among different areas. The revenue goals tracker in HubSpot will help you set goals and keep your team on track by allowing you to easily measure progress, automatically reflect any changes made to KPIs, and compare results against monthly, quarterly, or yearly milestones.
HubSpot has a powerful multi-touch attribution reporting feature. HubSpot supports three types of attribution depending on the asset! Similarly, deal forecasting can help you predict your revenue before making any deals, allowing you to make more informed decisions about your business.
How HubSpot Can Improve Your ROI
If you're thinking about adopting HubSpot's CRM software but are not sure if it is the right decision for your business, this tool will help inform your decision. You might have an awareness of what your ROI is but, what could your ROI be with the right tools? The ROI Calculator is a free tool that can help you calculate your potential return on investment with both marketing and sales efforts.
HubSpot will provide you with a detailed report on their findings and how your business can grow by using HubSpot CRM tools.
Conclusion
Lack of information can lead to companies making assumptions about how well their marketing strategy is working but, without a clear ROI of what those activities are bringing into the businesses, it is just guessing. Yet, the number of platforms that promise to give you a detailed insight into your ROI can make things even more confusing... What software is going to give you the right data to report on?
As HubSpot partners, we have helped dozens of companies adopt a new CRM that allows them to have a much better understanding of how well their marketing efforts are performing. By using HubSpot CRM these companies have a much better understanding of what their money is going into as well as allow them to make tweaks to their strategies and budgets accordingly.
About Insynth
At Insynth we deliver a predictable flow of leads, customers, and specifications for building product brands through our inbound marketing approach, proven to reach a technically demanding audience.
We use the latest marketing techniques such as construction inbound marketing, to equip building product companies to grow sustainability in this era of digital transformation.
As the only HubSpot certified agency to major in construction marketing. We have a proven formula of bringing a variety of functionalities together including CRM Implementation, Web Design, Sales Automation, SEO, and Email Marketing to achieve your ultimate aim: Growing your business and gaining new specifiers and customers.
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