79% of B2B marketers say that improving ROI of marketing activities is a key focus for 2020. And when it comes to inbound marketing specifically, proving ROI isn’t so straightforward. Over a quarter of respondents (26%) in our recent Inbound Marketing Insight Report considered this to be their biggest inbound marketing challenge.
Here we discuss the basics of developing a measurement strategy, including how to choose the right KPIs, how to track, and how to use the data to your advantage.
Reading time: 6 minutes
Why you need to measure your inbound marketing efforts
Successful inbound marketers don’t make decisions based on gut feelings. They make decisions based on data.
That’s why measuring campaigns is so important for the B2B marketing strategy. Being able to effectively calculate ROI for different inbound tactics also helps you decide on the best ways to move forward.
Additionally, ROI stats are vital to getting board-level buy-in. 11% of respondents said they struggled with getting approval on inbound marketing ideas, and 9% said they couldn’t secure enough budget. By using metrics to track campaign success, engagement and revenue, B2B marketers can make a better case for their budget requirements and get support from key stakeholders.
The basics of measuring inbound marketing
The ongoing commitment required for inbound campaigns is both costly and work-intensive, so being able to measure performance is key. However, measuring ROI isn’t always a simple task.
Here are some inbound ROI basics to know:
Inbound tracking is ongoing
It’s not a one-off promotion or sale, but an ongoing endeavor and this means your continued attention will be required for tracking success. In order to get accurate, actionable data, there needs to be regular analysis and reporting.
Inbound is usually multi-channel
Most inbound strategies involve several tactics across a number of channels, so effective and consistent tracking can be very difficult. You will need to use different tracking tools, and data must be compiled in a way that makes sense to stakeholders.
Inbound returns are a long-term gain
Unlike outbound campaigns, there’s no quick win. The sales cycle is complex and there can be a long journey ahead before people purchase. This makes it tricky to measure ROI in the early stages. Around 85% of companies using inbound marketing see improvements in their traffic within seven months – sales growth can take even longer.
Setting up your KPIs
What you decide to track depends on your goals. Ultimately though, all companies want to increase their leads, and they also want to convert those leads into customers. Not just any old customers either – the biggest draw of inbound marketing is that it generates repeat, brand-loyal and high-value customers.
Here are some KPIs you should be tracking:
- New leads – how many fresh leads are you attracting per month?
- Marketing qualified leads – how many of the leads are likely to become buyers? Marketing qualified leads can be calculated based on certain criteria such as company size, industry/sector, and content consumption.
- Sales qualified leads – how many of your leads are interested in speaking to your sales team? These are the leads that are hot to purchase and are most likely to convert.
- Opportunities – how many of your leads have already engaged with sales and are ready to move down the sales funnel?
- Customers – how many new buyers have you acquired?
- Customer retention rate – how many customers have you managed to retain over a set period of time?
- Customer acquisition cost (CAC) – how much does it cost, on average, to get a prospect to spend money on a product or service?
- Sales revenue – how much money have you generated through sales?
Tracking your metrics
There are many brilliant tools available for tracking inbound marketing efforts, many of which can be found in popular CRMs. If you have specific tactics you’d like to focus on, there are specialist analytics tools available for almost every inbound marketing channel, enabling you to gather greater insight and track your KPIs more precisely. The list is endless when it comes to technology.
No matter what tools you use, the key is to ensure that your data is consistent. Have a standard format for presenting the data each time, and have a continuous schedule in place for regular tracking activity.
Your framework for calculating ROI
Whilst it’s different for every business, for some metrics could be less relevant to your objectives than others, there are general guidelines you could follow. Here is a tracking framework we’d recommend exploring:
Step 1: Track the volume of traffic to your website driven by your inbound program. Web analytic tools such as Google Analytics can show you how much traffic has visited your site, including all the demographics around these users, and which campaign or channel they have been driven from. This highlights where investment in social channels is delivering it’s promises.
Step 2: Analyze the percentage of that traffic that converts into a lead through a CTA on your website. These leads will move through your system tagged as ‘inbound’ in your CRM. This’ll help you to explore how effective your website is at converting, whether your site content is performing optimally, and whether your investment on your website has delivered results.
Step 3: Determine the percentage of that traffic that qualifies as an MQL. This can help you to work out an average cost per qualified lead, by dividing inbound marketing costs by MQLs generated and passed over to sales. Overall, you can use this information to explore whether you’re targeting the right audiences, through the right channels, or using the right tactics.
Step 4: Always consider the percentage of MQLs that convert into opportunities in your CRM. Is your follow up, whether marketing or sales driven, driving revenue from these contacts? Exploring this data will assist in understanding whether your follow-up strategy is effective, or whether you need to adjust your nurture workflows.
Step 5: Measure the £/$ value of those opportunities – and the percentage of them that close a deal.
Following this framework, or one similar, will allow you to put revenue numbers against the leads based on their original source, indicating a clear top-line ROI figure that you can compare back to your inbound marketing spend.
Further measurement of the extended uplift of your campaign should also be considered. If you also deploy an account based strategy, you should see which leads driven by your inbound marketing strategy have helped build momentum within the buying centres of key accounts.
Factoring in your costs
To get an accurate ROI, you’ll always need to factor in this cost of investment:
- The cost of outsourcing – Whether you have an in-house team, a book of freelancers or a partner agency, resource is a big cost in your inbound marketing strategy. 28% of organizations outsource over 50% of their inbound marketing efforts – whether this be to copywriters and designers who look after content creation or to agencies who provide full-funnel demand generation
- The cost of amplification – When it comes to distribution, over 70% invest in paid social media activity and programmatic display advertising to support their inbound marketing activities. These services are not free – so it’s always worth bearing in mind that getting your content in front of the right audience will come with a cost.
- The cost of technology – what do you spend on CRM software add-ons, content management software, digital tools and other subscriptions? These tend to be fixed costs, making them easy to track. However, there may be price increases as you scale up.
Forecasting inbound marketing return on investment
Now you understand your costs, you can more effectively forecast the return you will see on your inbound marketing efforts.
Takeaway
It’s important to look at all metrics across inbound. Data such as social engagement, content downloads and interactions, help you to learn and adjust your content marketing or social media marketing strategy, helping to encourage greater interest and engagement across your channels. Tying revenue to this data, tracing cost per lead directly from the source of interaction, enables you to see the true monetary value of your inbound efforts and investments.
