Formulas for success: Use these 2 calculations to defend budgets & prove marketing ROI - VantagePoint

Formulas for success: Use these 2 calculations to defend budgets & prove marketing ROI

During your company’s budgeting process for 2018, did you find yourself feeling nervous about being able to measure and report on the success of the previous year, or to defend your ask for the coming year? That’s common—especially if you find yourself in the same ol’ marketing routine.

As data becomes increasingly available and easier to manage, a good goal for 2018 is to focus more resources on areas where you can make a measureable impact — and in turn be able to confidently report on that impact next year at this time.

Here are two areas where some number-crunching might prove beneficial.

1)      Demand generation/customer penetration

Often, we see companies put a lot of effort into gaining corporate approval for a particular account, but then put very little effort into driving demand or finding new opportunities within that new account.

Consider creating a demand generation program targeting the individual decision-makers.

The following table can help predict profit impact of a program, which can then help you determine the right marketing budget to allocate toward it. This also helps you set your objectives, so you know what to measure against throughout the campaign.

[table id=2 /]

% that will purchase: This number should be variable across the rows, representing different potential conversion rates (I typically use 1-10%, depending on the call to action and the marketing environment)# of decision-makers: This number should be constant across all rows, and should be based on a list you know is available

Average product cost: The average price a customer actually pays

Total projected sales: Column 1 x Column 2 x Column 3

Projected profit: Multiply total projected sales by your profit margin

In the example provided above, if you invest $75,000 into the marketing program and target only a 1 percent conversion rate, you get a 166 percent ROI. I’ll take that — how about you?

2)      Lead Generation

Salespeople depend on quality leads, and a well-crafted lead generation program can make reaching sales quotas more realistic — and less stressful for everyone.

To determine how many inquires/leads your company needs to achieve those sales quotas, try gathering the following data (examples included) and running the math:

  • Sales quota – $5,000,000
  • Average selling price (ASP) – $10,000
  • The Rule of 45 (45 percent of people who inquire will be a sale for someone)
  • Your company’s closing rate – 20%
  • Percent of leads that the sales team is responsible for, as opposed to marketing  50%

Sales quota divided by ASP gives you total number of buyers you need. Divide that number by .45 and then by your closing rate. This gives you the total number of inquiries/leads you need. Finally, calculate the percentage for which marketing will be responsible.

$5,000,000/$10,000 = 500 buyers; 500/.45/.2 = 5,555 total leads; 5,555 x .5 = 2,778 leads

Once you have that number, you have the target you need to hit with your marketing plan. (Keep in mind that these leads will be spread out over the year, so if you don’t have enough leads in the pipeline from the previous year, you’ll want to add more to your goal.)

Luckily, there are many lead-generating tactics that are fairly easy to predict based on past performance and industry averages, such as trade shows, sponsored webinars, digital advertising and gated content. Often, a cohesive lead generation campaign driving traffic to the same landing page is a successful solution.

I know it can seem scary to document measureable goals because then it’s pretty evident when they’re not reached. That’s bound to happen occasionally as you test new methods and tactics — but the good news is that you’ll know what’s working and not working. And won’t that knowledge be helpful going into 2019 and beyond?