Manufacturing is all about measures. Materials, waste, quality, time – you name it and there are a target and measure. But one area that 61% of manufacturing companies find difficult to gauge is Return on Investment (ROI) for marketing activities. And, at a time when the industry feels risk-averse, every aspect of your business needs to prove its worth. If you’ve been looking for a way to enhance your advertising activities and prove your marketing ROI at the same time, this guide shows you how.
What is Inbound Marketing?
As the name suggests, inbound marketing takes the opposite approach to traditional outbound methods. Instead of interrupting prospects with unsolicited communications, inbound marketing creates information for your prospects to find at a time that suits them. By attracting and engaging potential clients with content that interests them enough to visit your website, they’ll eventually convert to paying customers. This approach also builds your brand, educates your customers and increases lead numbers, quality and conversion rates.
But setting up a website without telling people it’s there won’t work. And a monthly blog post isn’t enough to secure the rewards inbound marketing can generate. Successful inbound marketing relies on the accumulation of quality content. Experts suggest at least one hundred website pages are required to make it easier for people to find your business on search engines. Hit the 400-website-pages mark and you’ll improve your Google profile and gain serious marketing momentum.
Of course, this takes time, money and patience. In fact, it’s likely to take seven months before you see a return on your investment. However, HubSpot research shows 85% of companies experience an increase in website traffic by this point.
When management teams are asked to wait for results, you’d better be sure to have your return on marketing investment stats ready to go. You can only calculate your return on investment if you know what your costs are. So, let’s start with those.
The costs you’ll need to measure will vary depending on your content strategy. The good news is that inbound marketing costs two-thirds less than traditional marketing tactics and provides three times more leads. Items you’ll need to spend money on include:
If you haven’t already got a website (where have you been?), setting one up and maintaining it carries a cost. Whoever does this for you, be it, your IT team or outsourced provider, establish the spend and identify the percentage of the cost your department is liable for.
As you house content on your website, you begin to offset these costs as you build a valuable business resource. Your website will be one asset that, unlike your manufacturing machinery, maintains, or even increases in value.
Inbound marketing will ensure your website investment doesn’t go to waste. According to Ascend2, 72% of marketers say the most effective SEO tactic was relevant content creation. Measure your website hits before and after your inbound marketing launch to understand the effectiveness of your approach.
- Content creation, social media and email marketing
Of course, content doesn’t magically appear. Whether you create materials in-house or hire freelancers or an agency, there’s a cost. You also need to create, distribute, monitor and analyse its effectiveness. And good content generates interaction which means you’ll need to manage your social media accounts to respond to comments, questions and any issues that arise.
Generally, content creation costs are front-loaded. But, by being smart and creating evergreen content you can reuse, repurpose and republish you’ll get more bang for your buck at a later date. Content market leaders, HubSpot, generate three-quarters of their blog views and 90% of blog leads from old posts.
Content comes in many forms as the PESO model below shows. Use this to identify which content you’re going to create and capture the cost (or projected budget) for each type on a spreadsheet.
Another ROI positive is that interactions with your content will produce customer insights you may have had to pay for in the past. Keep a track of previous costs and compare to identify savings since launching your inbound marketing plan.
You can also track improvements in less tangible areas like brand credibility and trust. Gauge your customers’ views with a questionnaire before launching your inbound marketing plan. A year later, run the same questionnaire to identify whether your inbound strategy is having a positive effect.
- Pay per click
If you decide to spend cold hard cash on PPC advertising, you’ll need a set budget that’s sufficient for your needs. To establish whether PPC is worthwhile for your business, use HubSpot’s calculator.
We often talk about investing in technology but, in this instance, it really does pay off. Inbound marketing is data driven but only if you have the right marketing automation software to capture, analyse and present that data so you can continuously improve your approach.
There are plenty of tools out there that will produce informative graphs like the one below.
In this instance, the colours identify the amount of traffic to your website from different sources so you can track the impact of your content. Jump to closed-loop reporting to see how else this type of software supports your ROI.
Calculating your ROI
Now let’s focus on the items you’ll measure to gauge the effectiveness of your strategy.
- Calculate Content Effectiveness
We’ve already mentioned that it takes around seven months to see returns on your inbound strategy. But that doesn’t mean you get to sit back and relax. Instead, use this time wisely to measure the effectiveness of your content.
The following measures will allow you to tweak your approach and improve your chances of a positive ROI once you get meaningful data:
- Page views – check how many people your content reached
- Engagement – track the time spent on each page, number of comments, likes and shares to understand how well people are engaging with each piece of content
- Bounce rates - identify the content your audience is not engaging with and understand why
- Views by author - assess which authors have most success and identify what makes their content different and replicate
- Email subscribers – monitor how many individuals you can contact by email (still one of the better-converting channels)
- User registrations – if getting people to sign up to an account is an important call to action, track how many active accounts with up to date details such as credit cards you have (suitable registration details will differ by industry)
Measure these, and other factors that are important to your content strategy, to continuously improve your material. The better your results, the more likely your ROI will please the management team when it becomes available.
Establish What Success Looks Like
Inbound marketing is made up from many moving parts that link to different departments. Some people compare it to an octopus with many tentacles reaching across the business, channels and content types. To control your inbound marketing mollusc, HubSpot recommends implementing the right software. This will help you take a closed-loop reporting approach as per the diagram below.
With different teams all playing a role in attracting, engaging, closing and delighting clients, it’s important to know who should be doing what and which actions have had most and least impact. Closing the loop means documenting every stage of your process and sharing it across marketing, sales and advertising. Then the sales team reports to marketing about what happened with the leads they received and you get to understand the best and worst lead sources and make improvements.
This will help you replicate success and get rid of tactics that don’t add value.
Understand your Return on Marketing Investment
Common marketing measures fall into two camps: those that help you measure the effectiveness of your marketing activities and those that provide financial ROI to management.
Marketing Activity Effectiveness
- New Business
This is the most obvious metric to measure and one of the easiest if you invest in inbound marketing automation software. This technology makes it easy to track and link your visitor activities up to and after the sale.
- Marketing Qualified Leads (MQLs)
Some visitors may land on your website with no intention of purchasing. However, the information they provide via your analytics tools may mean they have all the qualities of a good customer. Items such as sector, company size, expertise, location can all mark them as people to target with your marketing.
- Sales Qualified Leads (SQLs)
Marketing automation software also identifies visitor interactions so you can identify SQLs. These are visitors that are oozing buying signs like visiting your website multiple times and downloading eBooks or white papers.
Agree on a specific number to move down the sales funnel with the sales team each month. Monitor whether you’re hitting your target each month to ensure your inbound plan is generating quality leads.
Measurable Items the Business Wants to See
- Customer Acquisition Cost (CAC)
This metric takes the cost to make something to its logical conclusion: the cost to sell. Apply it to new and existing customers by including marketing and advertising spends (including team costs) plus any additional costs such as R&D and materials if you are promoting a new product. To work out your cost to acquire, download this CAC calculator.
- Marketing as a % of CAC
This figure varies depending on sector and the type of company you work for but sales and marketing should agree on a monthly budget that takes your inbound marketing strategy into account.
- Lifetime Value of a Customer (LTV)
This metric is forward looking and estimates the value a customer could add to the business over their lifetime and is often expressed as a ratio. For example, if your CAC is £100,000 and the expected LTV is £500,000 the LTV: COCA would be 5:1. Higher values are generally better but lower values can mean there’s room for growth and more marketing could yield increased returns.
Because inbound marketing nurtures existing customers, they’re more likely to stay with you which reduces the cost of attracting new clients.
Less tangible items may also be of interest to business leaders:
- If the collaboration between departments is a key behavioural goal for the company, then an inbound marketing approach that requires departments to work together ticks another box.
- A deeper understanding of customers, competition, company goals, products and services is helpful for people beyond marketing. Share your findings with sales and customer services to help other teams benefit from your activities.
- Monitoring and analysis results in transparency, something that most businesses value. And your clearly defined goals and measures will mean there’s nothing obscure about your plan which will help gain buy-in across the business.
When to Start Measuring Your ROI
While the ROI magic seven-month mark seems like a long time to wait for the fruits of your inbound marketing labour, the payout will be worth it. Because measuring marketing ROI is data driven, you need data to analyse. Which means you need to start delivering your inbound marketing plan before you can provide meaningful statistics.
Once you start, you could find that what you thought would resonate falls flat and something unexpected works. But, results from your call to action and email subject line A/B testing will identify which approaches generate the best results with which clients. And, while the outcomes of your inbound marketing strategy can’t be guessed, as you become more practised, you can use cold hard stats to predict the success of campaigns.
Inbound marketing has become popular not only because it works, but because companies can prove it works. As more manufacturers implement inbound, it’s become an indispensable part of their overall marketing strategy. The very tools it takes to set up an effective inbound approach are the same tools that prove their marketing ROI.