You're sitting at your desk pounding away at your next blog post and you hear your boss sidle up behind you.
"Marketer," she says.
"Yes?" you reply, turning, even though you were totally on a roll.
"What's your ROI?"
"What do I pay you for?"
Don't panic. It is possible to measure the ROI of an inbound marketing strategy. In fact, you should be doing it. Not just so you can keep your job, but so you can do it well and help your company grow.
Keep reading to find out how you can measure the ROI of your inbound marketing efforts.
#1 Remember the Purpose of Your Content
As a writer of blogs, landing pages, and eBook, I want my content to be wonderful. I want it to sparkle with exactly the right words and to convey thoughtful understanding of concepts.
The purpose of my content is not to be great. If it's great that's great and everything is great. Great.
The purpose of my content is to achieve business objectives. Even if my content would bring Hemingway himself to tears, it is not doing its job if it is not accomplishing business goals. You know, like making more money (to simplify).
If you want to measure inbound marketing ROI, you have to keep this in mind throughout the process. It is not enough to look at how many views your blog has, or how many Twitter followers your brand has earned. You have to be able to draw connections between those numbers and the almighty dollar or you aren't measuring ROI at all.
#2 Evaluate Your Metrics
In his Field Guide to Content Marketing Metrics, the Content Marketing Institute's Jay Baer outlines the four metrics you can track as an inbound marketer (for the sake of readability, we'll equate content marketing and inbound marketing for this post). The four metrics are:
- Consumption -- how many people view or watch your content
- Sharing -- how many people share your content
- Lead gen -- how many people that consume your content become leads (usually through content downloads, but also email list and blog subscriptions)
- Sales -- how many people that see your content and become leads are actually converted to customers
To be able to report on the ROI of your inbound marketing efforts, you will want to do your best to track all of these and be able to draw a line between them, showing how they are related both to each other and to your ultimate business goals (more customers/more revenue).
#3 Take Careful Measurements Over Time
When you know what kind of measurements you're looking for, you can start (or continue) to measure your inbound metrics. Software like HubSpot makes it extremely easy to track all types of metrics. If you do not have an all-in-one solution like HubSpot, you can cobble together these metrics using tools like Google Analytics as well as your CRM.
It is important to remember that measuring your ROI is not a one time action. Rather, you will need to take measurements over time to get the efficacy of your inbound marketing strategy.
#4 Assign Dollar Values to Intangible Numbers
To know how effective your inbound marketing is, you need to be able to measure it in dollars. For instance, if you are looking at the consumption metrics for your blog, you want to be able to know how much one view -- or a thousand views -- is worth.
Don't just assign a number at random, though. Go back to step 2 and determine how many of your blog views are leading to CTA clicks and how many of those are becoming leads. Then take your sales data that should tell you how many leads become customers, as well as the lifetime value of those customers. The combination of this data should allow you to calculate, in this instance, how much a blog visitor is worth and thereby extrapolate how effective your blogging is. You can use the same formulation to calculate the value of an eBook or other download, a Facebook post with a CTA, or a Tweet. Every piece of your inbound marketing strategy should have a value.
#5 Determine How Much You're Actually Spending
While steps 1 through 4 should give you some idea as to how to measure the "return" part of ROI, what about the "investment" part? You will need to know how much you are actually spending on your inbound marketing efforts in order to know what your ROI ultimately is.
While the cost of something like the HubSpot platform is a concrete number, you will also need to assess the cost of the employees or contractors you have working to create the content itself. This cost should include the content creator's rate as well as overhead, which is often calculated as 50% above the cost of the employee. You can use the 50% figure as a shortcut for the true cost of your employee/contractor's time, or else use the actual overhead cost of software, office space, etc. to calculate your inbound investment.
With these available numbers, you can take the total investment minus the total earned through inbound marketing, then take that number divided by the total earned to get your ROI percentage.