By John Sonnhalter, Vision Architect, Sonnhalter
B-to-B marketers are always facing the challenges from the C suite and CFO to measure ROI. According to an article by Debbie Pierce, B2B marketing ROI calculations your CFO will love, 93% of CMOs are under more pressure to deliver measurable results, and only 5% feel they are doing a good job.
Ironically, the C suite and CFOs use the same measuring tools that the marketing departments are using. They’re not concerned about follows or leads, what they want to know is for dollars spent what are the incremental sales resulting from each marketing activity. They are obviously looking for the best bang for the buck(a novel approach).
Ideally they want to come up with some formula like this one from Nitromojo.
Accurate ROI Calculation – Simple Version
Apply these steps to individual campaigns, media types (Google ads, digital ads, trade shows, etc.) and other primary segments to enable a clear view on how various expenditures and factors contribute to ROI and profit.
- Calculate actual sales generated from a particular marketing expenditure
- COGS subtracted from actual or projected sales = incremental profit
- Campaign costs subtracted from profit
- Campaign costs divided into incremental profit
- % of return compared with cost of money
Here is an actual example of a Demand Gen budget after applying the simple ROI calculation:
This is a simple, accurate way to track incremental sales that everyone can live with. Are you doing something like this?