Of all your investments, you might find that measuring the ROI you get from marketing to be the most challenging. This is true to a point for most industries, but it can be even more difficult in construction.
This is because the journey your clients make from prospect to customer is longer than it would be for most purchases. This can make it difficult to track how they first encountered your services and what eventually convinced them to invest in you.
Many who have traditionally made construction purchases relying on word of mouth or existing relationships are shopping differently in the aftermath of the pandemic.
More consumers than ever are turning to digital platforms to make informed choices about how they spend their money. Because of this, investing effectively in digital marketing is more important than ever. To know whether you’re achieving this or not, it’s vital to understand the ROI your marketing strategy is currently giving you.
Marketing in 2021
Before the rise of digital marketing, it seemed simpler to tell how a new newspaper or radio ad boosted the number of enquires over a few months.
Now, when you might have paid ads running, a website SEO strategy, a few social accounts and whatever else marketing have come up with happening at the same time, it’s all a bit more nebulous.
The question is: How can you tell which, if any, of these are actually worth the investment you’re putting in? Particularly if you don’t know lots about marketing yourself, it’s easy to feel like you’re just throwing money down a dark hole.
The good news is that, with the right analytics in place, it’s probably easier to track where your sales are coming from than you would think. This can help you to invest in what works, dismiss what doesn’t, and successfully grow your business.
In this post, we’ll take you through how to find the ROI for overall marketing activity and track which channels are helping towards your goals, as well as finding the ones which are using up resource to little benefit.
1. Find out the ROI for all marketing Activity
There are so many metrics you could measure when it comes to marketing. Website sessions, ad clicks, social media likes, keyword rankings… Most of these can be useful to know, but they’re not proof of ROI on their own.
For now, let’s focus on the metrics which clearly have an impact on your bottom line. These will give you an idea of what effect your marketing as a whole is currently having on your business.
Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC)
You might already know this one. If not: it basically tells you an estimate of the value you get from each client, next to what you spent to acquire each client.
This metric can give you a general idea of what your sales and marketing efforts as a whole are delivering to your bottom line.
The higher the LTV:CAC ratio, the higher the ROI. If you don’t know your LTV or CAC figures off the top of your head, you can run some simple calculations to work them out.
Marketing Originated customers %
AKA: How many customers came to you through a marketing channel. This directly shows you the impact your marketing is having on how many new customers are coming through.
If you use a CRM, like HubSpot, or a different analytics platform, it can be easier to track how your customers found you. Once they’ve submitted an enquiry form, you should be able to track if they ended up on that page after seeing a blog post, a search engine result, or a link on twitter.
If you don’t, or would like to confirm your information, you could also ask new clients to check a “how you found us” box as part of the enquiry process.
Marketing Influenced Customers %
The percentage of leads or customers who interacted with marketing at any time of the buying process. This can indicate how effective marketing is at not only generating new leads but nurturing existing ones and helping to close deals.
Again, this is easiest to track automatically through a platform like HubSpot, but could be established in a questionnaire, although this is likely to be less accurate.
If you would like more information about any of these metrics, or examples of how they might be calculated, you might like our free Ebook, the Marketing Metrics which Matter.
2. Look at the performance indicating metrics at key points in your sales process
Now that you have an overview of how well your marketing is doing, it’s time to dig into some specifics.
To see how well different parts of your sales funnel are functioning, it’s useful to find out the following figures. (As a note, if you’re getting these through a platform or someone in your marketing department, make sure to define what you want- a “lead”, for example, has a few different definitions).
- Website Traffic
- Leads (Those who have given you a piece of contact information)
- Qualified Leads (Those who have indicated a marked interest in your services)
- Customers (Those who have invested in your services)
If your sales process includes additional stages – such as when you’ve sent a quote through to a prospect- you might choose to include those figures too.
How does this help? Well, to look at an example:
Here, we can see that the marketing strategy being used is consistently delivering good levels of traffic to the website. This, in turn, is generating a decent numbers of leads. The channels used for these are performing their function well and giving the business a good return on their investment.
Where the numbers are really dropping off in the example is qualified leads. This tells us that leads are currently not being nurtured effectively. Armed with this information, the business could then investigate further into the channels which are meant to be nurturing leads to find out what isn’t working.
3. Dive into Channel Specific Metrics.
Looking at every channel specific metric every meeting would take forever, so it’s best to focus on the ones you have goals for. This is usually either because they’ve been doing so well that you’re investing more in them or because they’re not pulling their weight.
Once you’ve looked at how different parts of your sales funnel are functioning as seen above, you can use that to narrow down what the high and low performing channels might be. Here’s a few of the channel specific metrics you can check to diagnose the problem with different stages of a sale.
Having identified which channels are contributing well towards your ROI and which are not performing well, it's time to think about solutions.
4. Setting goals
SMART goals enable you to clearly focus and measure your marketing efforts over set periods, and can help with accountability.
Let’s think about Can We Fix Inc’s situation. Their overall problem is that they are not generating the revenue they hoped to through marketing. They have now located the specific point in the buyer’s journey that isn’t working (lead capture) and used that to explore the channels which should affect this metric.
With this information, they can now set themselves some SMART goals. A SMART goal is
They have already found what result will make a difference to their ROI: More leads. Specifically, more leads generated by marketing activities. They plan to do this through changes to their landing pages and expanding their use of CTAs.
Usefully, this is also a metric which is fairly straightforward to measure. They decide they would like to increase their marketing-generated lead by at least 10 per month.
But is this achievable? To find out, they could look at the figures they’ve achieved in the past, or perhaps how their similarly-sized competitors are performing.
By linking this SMART goal to increasing marketing ROI - a company goal- they know it is relevant.
Finally, they’ll need to build in some time parameters. These could include the first month they expect the goal to be reached, how often the goal will be reported on, and when they will revisit the goal.
Alongside this goal, they could choose to have additional SMART goals for each of the different lead capture strategies, or how many of the leads captured will convert to customers within a time frame.
5. Testing and improving your marketing activity
Once a goal is established, you should think about how it might be achieved alongside any marketing team members.
If you’ve found a particular avenue is working well, you should consider if investing in it more could generate more growth. You should also think about why it’s performing well, and whether a similar message or strategy can be used effectively on other channels.
If a channel really isn’t working for you, you have two options: find a way to make it work, or get rid of it. Possible changes worth trying include in messaging and design, the audience being targeted, and the type of media you’re using.
If you decide to stop using a channel, it’s important to see if this has an impact on your performance indicating metrics over the next few months. You might find that the reason you were getting so much direct traffic was people remembering those Facebook ads which didn’t seem to be working.
Once you’ve decided on a few changes you’d like to try, you can use A/B testing to find out if they’re more effective than what you were using before, or to see which is the best of your new options.
When you don’t know where to start, it can be difficult to look at a page of marketing analytics and find out what’s actually effecting your ROI. We hope to have demystified this process enough to give you a good idea of the kind of value different marketing activities are providing your business.
If you still have questions about monitoring marketing, digital strategy, or the impact of different metrics – book in time with one of our digital marketing experts. We specialize in data-driven marketing so metrics are our bread and butter.