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Measuring Your Inbound Marketing ROI

Why Inbound Marketing Works

The underlying concept of Inbound Marketing is rather simple: provide your audience with great, free content to build trust and familiarize them with your brand.

Eventually, when a customer is ready to make a purchase, they’ll remember you. They’ll feel more comfortable making a purchase with a brand they recognize. Plus, they feel like they kind of owe it to you.

That’s called reciprocity. And this technique is used nearly everywhere, from restaurants in mall food courts to the finest, most exclusive dining establishments.

Why am I using examples of food, you may ask?

Firstly, because food is something we can all relate to and understand. Secondly, because it’s getting dangerously close to lunchtime as I write this.

So, before I get distracted any further, let’s go back to the topic at hand: reciprocity.

When I go to the food court at my local mall, there’s always this one Chinese restaurant that offers free samples. Even if I’m not that interested in eating Chinese food that day, curiosity tends to get the best of me, drawing me towards that distinctly delicious smell.

As I approach, the employee behind the counter offers me a piece of teriyaki chicken on a toothpick. To feign interest—and avoid awkward eye contact while enjoying the free sample—I tend to take a long, hard look at the various options in front of me.

“What’s that?” I ask as I point to one of the steaming bowls of meat and vegetables in front of me. For some odd reason, I pretend like I’m not intimately familiar with Mongolian beef, despite ordering it at least once or twice a month.

The guy behind the counter proceeds to kindly describe to me the flavors, ingredients, and spices in the dish. He even goes so far as to illustrate a brief history of Mongolian beef. If I weren’t already a fan of this place, I would be now.

Before wasting too much of his time, I decide that I might as well eat here after all. “I’m not that hungry for Mexican or American food,” I think to myself. “Plus, what other restaurants out there are generous enough to give me a free sample of their best dish? This restaurant has always done me right in the past and I always enjoy my meal when I sit down here.”

In my mind, I create an argument for why I should eat there. And while I probably won’t admit it, my true reasoning is primarily based upon that little piece of teriyaki chicken they offer me, every time I walk by.

With Inbound Marketing, you become the Chinese restaurant. You’re essentially giving out free samples of what you want your audience to pay for. Sometimes it feels like a waste of time and money. For goodness sakes, even the paying customers come back for a free taste as they pass by.

However, if there’s one thing you should realize about giving away digital content, it’s that it never runs out. And you don’t have to calculate your budget for the number of people you reach. Once you’ve created that piece of content, it can be duplicated and downloaded billions or trillions of times.

Teriyaki chicken, on the other hand, will eventually run out.

How to Measure Inbound Marketing ROI

So, how do you measure your Inbound Marketing ROI? Do you divide your online revenue by clicks, emails, calls, downloads, customers, or views?

The first thing you should know about Inbound Marketing is that it’s not a one-time event or campaign—it’s a way of doing business that involves long-term strategy. According to HubSpot, you should wait at least 7 months before trying to measure results. That may seem like a long time for those of us who are impatient.

The good news, however, is that 85% of those companies using inbound marketing reported an increase in traffic during that time.

This brings us back to our original question: what should I be tracking?

Here are 4 KPIs (Key Performance Indicators) that you’ll want to watch closely:

  • New Leads – How many people have indicated interest in your brand by exchanging their information for your content?
  • Qualified Leads – Of the total amount of New Leads, what percentage has a high chance of becoming a future customer?
  • Opportunities – Of the total amount of Qualified Leads, what percentage has moved further down the sale pipeline and appears primed to make a purchase?
  • Customers – After all has been said and done, what percentage of New Leads, Qualified Leads, and Opportunities actually became a customer?

If you’re trying to be a little more scientific with your data-gathering, use other metrics, such as:

  • CAC (Customer Acquisition Cost) – How much money does it cost you to gain one customer? Calculate this number by dividing Marketing and Advertising overhead costs by the number of new customers within a given period of time.
  • Marketing Expenditure as a % of CAC– Depending on your industry and your company goals, you’ll be expected to stay within a certain range. Calculate this percentage by dividing Marketing Expenditure by CAC and multiplying that number by 100.
  • CLV (Customer Lifetime Value) to CAC Ratio – The CLV is a measurement of how much money you’ll make from a customer during their lifetime as a purchasing customer. Calculate this ratio by dividing the average CLV by the average CAC. If your ratio is 1:1, that means you’re breaking even. If it’s less than 1, you’re in serious trouble.

Tracking all of these metrics is extremely easy if you already use a top CRM like HubSpot—the tools are already built-in. If you don’t use a CRM, however, platforms like Google Analytics can help you measure them for free.

Another thing to keep in mind is that the accuracy of data you provide directly affects the accuracy of the results you receive from analytics software. Don’t expect to get accurate results if you’re not keeping tabs on every penny earned or spent on a customer.

Some expenses to monitor include:

  • Technology Costs – Subscriptions to marketing technology are expensive and can add up quick—especially if you’re utilizing a MarTech stack.
  • Content Creation Costs – How much time and money are being spent on creating images, videos, articles, and eBooks? How much is being spent on distributing them?
  • Social Media Management Costs – Tweets don’t write themselves. Who’s in charge of writing your social media posts and who monitors your accounts daily?
  • Email Marketing Costs – Good emails that create conversions are hard to come by, making them rather expensive. Email funnels also need to be created as well, which take a lot of time and planning.
  • Copywriting Costs – Who’s writing your landing pages, sales letters, and other written documentation? Professional copywriters can charge anywhere from twenty up to hundreds of dollars per hour to write content for your company.

This is, by no means, an exhaustive list of marketing and advertising costs, but it should give you a good idea of what you should expect to pay for when beginning an Inbound Marketing campaign.

Is There an All-in-One Solution?

The costs of Inbound Marketing can get out of control really fast. When considering that you’ll have to run your campaign for at least 7 months to see any tangible results, it’s absolutely vital that you budget for the long term as well.

At Sales Buddy, we deliver affordable Inbound Marketing services that include content creation and copywriting, a marketing technology stack, and distribution across social media in one integrated platform.

We also give you your own custom dashboard to monitor the performance and spending of your Inbound Marketing campaign from any device, so you know what’s going on in real time.

And as you keep track of your campaign from the office or the living room, you’ll be able to watch hot leads pop up in your Inbox or CRM. These leads are then forwarded straight to your sales team to close.

Interested in learning more about how Sales Buddy can make Inbound Marketing simpler and more affordable?

Go ahead and schedule a quick chat with Corey, today.

About the Author Michael Edgar

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