To avoid marketing expenses becoming a blind flight, it is crucial to know where the money is going. The ROI of your B2B marketing gives you information about this. We show you how to calculate it.
Together with your marketing team, you have launched a phenomenal advertising campaign for your B2B company over the past few weeks. All of your employees were fully utilized and you did a really great job in your opinion. Now you get a call from management wanting to know what the ROI is on the B2B marketing campaign you ran?
So the management wants answers to the following questions:
How much did the fun cost?
What was the investment?
What turnover was achieved with the campaign?
How much profit has been made for the business?
In addition, there are some other questions such as the number of leads gained, the conversion rate and the question of how to gain new customers. Now your head is spinning and you need a pot of coffee. Where are you supposed to get all these numbers from? You and your team, you've been working like crazy around the clock. Isn't that enough proof of your dedication?
This is where ROI comes into play. You don't have to be a mathematical genius to calculate it - with a little know-how you can quickly evaluate the success of your marketing activities and compare them with other campaigns.
The term ROI comes from the English and means Return On Investment. Translated meaningfully, this key figure conveys the return on investment or return on capital. It is intended to determine the relationship between investments made and profit.
In terms of marketing, ROI in the B2B segment means determining the return on every Swiss franc or euro spent there
In the field of marketing, it is difficult to determine the individual positions for the calculation of expenditure and revenue. In some cases, several campaigns intertwine via the most diverse channels. The resulting actual turnover and profit can only be determined if there is a connection between the concluded business and the origin of the customer. In this context, tools such as Google Analytics are important helpers to calculate the ROI
A production company for business software achieves an annual turnover of 2 million Swiss francs with new customers. The profit is 5% of the turnover. In this case, this means 100,000 Swiss francs.
As part of the marketing campaign, 5,000 prospective customers visit the company's website during this period. From this, 100 leads are generated, of which 3 new customers end up buying software solutions from the company. The conversion rate in this example is 3 percent. The resulting profit for the company amounts to 30,000 Swiss francs or 10,000 Swiss francs per new customer
The costs for marketing amount to a total of CHF 8,000 and are made up as follows:
CHF 4'000.- Personnel expenses
CHF 2'000.- professional articles and blog contributions
CHF 1'000.- cost of materials
CHF 1'000.- Licence fees for the marketing automation software
With a revenue of CHF 30,000 from all new customers from the marketing campaign and a total cost of CHF 8,000, the ROI is 375% (30,000: 8,000 x 100 = 375%).
With a cost distribution of CHF 8'000.- per 100 leads, this results in CHF 80.- in marketing expenses per lead. Or put very simply: One lead costs you CHF 80.
The English term from economics Return On Marketing Investment (ROMI) is used to determine the efficiency of advertising measures in marketing campaigns on the Internet. It is used to determine how marketing expenses affect the profit of the company
In the field of online marketing, it is relatively easy to accurately determine the ROMI of an advertising campaign with the help of a web tracking tool such as Google Analytics. The analytics tool determines the number of visitors to the company's own website. At the same time, it is determined how many interested parties on the page have ultimately purchased a product and what sales have been achieved with it
The formula for calculating ROMI is: (sales - marketing costs - product costs) / marketing costs
If we apply this formula to the following parameters
Turnover: 10'000.-
Advertising costs: 1'000.-
Product costs: 4'000.-
we get a ROMI of 5.0.
There is no exact specification of what constitutes a good ROI. The determination of the key figures depends on the respective:
Industry
Products or services
Amount of marketing expenses
Of course, you also have your own ideas about what goals you want to achieve. In business administration, a good ROI lies in a range of 7 to 10 percent. If your company is still growing strongly, ROI B2B values of up to 20 percent are also a worthwhile goal.
However, our experience shows that in practice, the "time to ROI" - i.e. when my investments start paying off - is often more important than the percentage.
Unfortunately, in practice, advertising expenses in the company are often an opaque cost pool. This does not have to be the case. That's why it's important to use key figures to determine the extent to which revenue can be generated from marketing campaigns. With some tools and some know how it is possible to calculate the ROI and also to find out what a good ROI and ROMI are in your case. With the results of these calculations, you will be able to make your marketing even more successful.