You can’t manage what you don’t measure, right? We start off by doing a dive into the history of your marketing spend to see what kind of results you have been getting–then we start setting goals. Believe it or not, many of our clients have never set marketing goals. It’s one of those deals where you probably have no clue where to start–too many channels and they all work differently.
Once you have your goals penciled in, OpGo monitors the progress and offers recommendations for optimization. Our team works in both traditional and digital media. We understand the customer journey and the different metrics for B2B and B2C.
Our analysts provide valuable feedback to improve the efficiency of your marketing budget. We are in a continuous state of optimization to help you reach your goals and help you create new ones. We work with your existing team, helping to keep everyone going the same direction.
Calculating Marketing ROI
There are a few different ways to calculate marketing ROI, but the key is to be sure to capture all of the cost within the marketing investment. The basic calculation is profit minus investment, divided by the investment. It sounds simple enough, but it can be difficult to calculate if you are not tracking where sales came from. In B2B, it’s critical to at least have a spreadsheet tracking how your customers found you and what factors influenced their decision to make contact. There are automation tools that can tell you how many touches, first touch, last touch, etc.–but ultimately, your are simply trying to learn about the customer’s journey. How many times did they review your products or services? How often did they come in contact with your brand before they choose you? Once you have a solid understanding of customer triggers, you can enhance the experience you provide to them along their buying journey which should lead to better ROI.
Lifetime Value of a Customer
You need to know the lifetime value of your customers in order to know how much to spend on marketing. To figure this out, review the past purchases of your customers to get the average purchase amount for a specific period of time. (This would require looking at several periods to get an accurate average.) Take that number times the length of time they will be loyal to your business (the average term a customer continues to transact with you) and you have your LTV. Keep in mind, this number just accounts for sales, not the cost of goods sold (COGS). Once you have an estimate of a realistic lifetime value of a customer, you can use that to determine how much you are willing to spend (CAC) to acquire new customers. Note, you want to be sure your CAC is much lower than the LTV.
Cost to Acquire a Customer
With a specific CAC amount, you can be confident in the budget and focus on the strategy behind the channels and messaging that will be used to move prospects through the funnel. This is especially valuable with longer sales cycles where one may be concerned with the amount spent on a specific target audience. To calculate the CAC, use the lifetime value (LTV) and the opportunity list (prospects) and decide what you are willing to invest to gain them as customers. Consider the investment may include multiple touch points. (Customer research is invaluable when it comes to gaining insights on the journey / path to purchase.)