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How to Measure Inbound Marketing ROI

By Sandy MooreNov 11, 2016

measure-inbound-marketing-roi-fixed.jpgYou create great content, add value for your customers and build trust with them.

It sounds simple when it’s said that way, but inbound marketing isn’t necessarily easy. It requires an ongoing commitment to publishing and communicating with your prospects and customers. This can be a costly and work-intensive endeavor.

So how exactly do you measure your inbound marketing ROI? By visits, email subscribers, phone calls, sales, all of the above or some other metric?

Here’s what you need to know about measuring your inbound marketing ROI.

The Basics of Measuring Inbound Marketing

Inbound marketing is not a campaign: It’s not a one-off promotion or sale. It requires your ongoing attention.

Inbound marketing is often a multi-channel endeavor: Like an octopus, you’re spreading your tentacles out in different directions, driving traffic and prospects from many social networks and online platforms. This can make tracking and measuring difficult.

You can’t measure inbound marketing over the short-term: You have to take a long-term perspective with inbound marketing. How long? At least seven months. According to HubSpot, 85 percent of companies using inbound marketing increase their traffic within seven months.

What to Measure

This depends on your goals. But for most companies, pageviews, email subscribers, user registrations and sales will be among their top priorities.

Here are several KPIs that you should be tracking:

  • New leads. How many leads are you attracting every month?
  • Marketing qualified leads. These leads are likely to become future customers based on criteria such as company size, content consumption and so one. These are leads you’ll want to specifically target with your marketing.
  • Sales qualified leads. These leads are interested in talking to someone from your sales department. Sales and marketing teams should agree on a specific target number to meet on a monthly basis.
  • Opportunities. This is the number of leads that engage with the sales team and move down the sales funnel. There is a good chance they will become new customers.
  • Customers. The number of new paying customers.

But you’ll also be reporting to management, who will likely request:

  • Customer acquisition cost (CAC). Your cost of customer acquisition can be calculated by adding up your advertising and marketing overhead and dividing it by the number of customers for a set period of time.
  • Marketing as a percentage of CAC. This number varies depending on the industry and the type of company you’re a part of. Your goal should be to have a benchmark you can measure against.
  • Ratio of customer lifetime value (CLV) to CAC. If, for example, your CAC is $100,000 and the lifetime value of the customer is $600,000, your CLV to CAC ratio would be 6:1. At first glance, a higher ratio is better, but this isn’t always the case—it usually means you can increase your growth by spending more on marketing.

Tracking Your Metrics

Tracking most of the above metrics doesn’t have to be difficult. If you’re already using HubSpot or another CRM, you’re equipped with the tools you need. If not, you can also take advantage of tools like Google Analytics.

As we pointed out earlier, tracking isn’t a one-time endeavor. You have to measure the effectiveness of your inbound marketing initiative over the long haul, or you will not gain a clear and cohesive picture of what’s happening with it.

Another important step at this stage is to assign a monetary value to your metrics (but don’t randomly assign numbers to them). For example, how many of your page views are leading to clicks on calls-to-action, and ultimately to leads? Together with your sales data, determine how many of your leads are converting to customers, and examine the lifetime value of your customers. In this way, you can calculate the exact value of a page view.

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This metric, however, will shift over time, and it’s important to monitor how it shifts so you can adapt as needed.

Factor In Your Costs

Without accounting for costs, we can’t get a holistic picture of how your inbound marketing program is performing. Marketing is an investment, which means there is also a payoff. But you won’t know when you’ve broken even on your investment, or when your marketing initiative is profitable, unless you factor in your expenses.

It’s important to keep tabs on:

  • The cost of technology. You’ll need to add your CRM software, content management software and other subscriptions—such as project management software—to your expense column. These are fixed costs that tend to fluctuate very little but can cost more when you’re scaling your operation.
  • Content creation. Whether you’re using freelancers, an agency or an in-house team to create your content, there are costs associated with producing marketing assets.
  • Social media marketing. How much time is going into managing your online presence, and who is responsible for it?
  • Email marketing. Who is doing your email marketing, and how much time goes into creating campaigns, sequences, list segmentation and so on?

This is not a comprehensive list of costs, which will depend entirely on your specific initiative, what channels you’re using, as well as the human resources engaged.

Stop Guessing and Start Measuring

There are different strategies for measuring your inbound marketing ROI. The exact nature of your marketing program isn’t going to be the same as anyone else’s, which means there is a need for a somewhat tailored approach to measurement. Beyond analytics tools and content creation, inbound marketing is a customized initiative.

The key thing, then, is to start measuring. Your process may not be perfect at first, and it may require some tweaking, but this is a far better option than waiting for a manager to ask, “What’s the ROI of this program?” and you’re caught without an adequate answer.

PIVOTING YOUR PLAN with Inbound Marketing

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The Author

Sandy Moore

Sandy Moore, a lead strategic accounts manager, brings 15 years of marketing and advertising experience to Kuno and has extensive knowledge and experience in marketing, promotions, public relations and advertising sales.
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