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Whether you work in-house or have clients, marketing ROI is a critical component of making sure your marketing efforts are working — and proving to key stakeholders that you’re adding value.

In this post, we’ll review the data you need to pay special attention to when measuring ROI, as well as how to calculate ROI based on your campaign goals.

Prep work for calculating marketing campaign ROI

Crunching numbers and calculating ROI is the easy part. Most of the work goes into choosing the right ROI calculation for your business or campaign and then pulling the necessary data to plug into the equation.

Determine your revenue and marketing spend: Need I say more? For campaigns where sales are the goal, you’ll need to know your post-campaign revenue and total marketing spend. If you’re optimizing for leads or other non-monetary conversions, see below.

Calculate the value of future customers: For some campaigns, success is measured in conversions that will turn into revenue later — think lead form submissions, newsletter subscriptions, etc. But it’s still important to ascribe a dollar value to each conversion because, while these calculations aren’t exact, they at least enable you to get a general idea of how much money your hard-won conversions will bring in.

The two most common ways to calculate this are average purchase value (APV) and customer lifetime value (CLV). If your customers tend to only buy once, or very sporadically, you can stick to APV. But if your customers tend to buy multiple times or pay via subscriptions, CLV may be a superior metric to use.

Determine sales cycle length: Another variable worth considering is how long it will take the marketing campaign to show results. If your product or service has a high price point, your sales cycle is likely considerably longer than, for example, an e-commerce clothing company. Alternatively, you may find that the sales cycle for leads you gain at tradeshows is usually much faster than those generated through digital channels (or vice versa).

In either case, take a look at your historical data to determine your sales cycle length before running ROI calculations. That way, you can be sure you’re giving your campaigns enough time to generate revenue before you measure them.

How to find the right ROI calculation for your needs

At face value, calculating ROI is simple: Just subtract marketing spend from revenue to determine your ROI figure, and then divide again by marketing spend for your ROI percentage. But depending on the specifics of the campaign, it’s important to make small tweaks to this formula for the sake of accuracy (and to prove you’re doing your job!).

1) Your campaign is optimized for one-off sales 

In this situation, you can stick to the simple equation for ROI percentage:

ROI = (Revenue – Marketing Spend) / Marketing Spend

Example: You run a Facebook ad campaign promoting your new jewelry line. You earn $5000 in revenue and spent $2000 on the campaign. Your ROI is then (5,000 – 2,000) / 2,000, or 150 percent.

2) Your campaign is optimized for non-monetary conversions that will turn into recurring sales 

Similarly to the situation above, you want to assess how much money you stand to make based on customer lifetime value, instead of just one-off revenue. First, find your customer acquisition cost:

Customer Acquisition Cost = Revenue / New Customers

Then, plug in numbers to this modified ROI equation:

ROI = (Customer Lifetime Value – Customer Acquisition Cost) / Customer Acquisition Cost

Example: You run a beauty products subscription service and conducted a direct mail campaign to get new subscribers. You spent $5,000 on the campaign materials, and earned 50 new subscribers as a result, making your customer acquisition cost (5,000/50), or $100. Your customer lifetime value is $200, so your ROI stands to be 100 percent.

3) Your campaign is optimized for non-monetary conversions that will turn into one-off sales 

Here, you can still use the original ROI equation, but you need to determine both your estimated ROI per lead and your sales conversion rate. First, find your customer acquisition cost:

Customer Acquisition Cost = Revenue / Total leads

Then, find your ROI per lead:

ROI per lead = Average Purchase Value – Customer Acquisition cost

Next, determine your forecasted revenue based on your lead to customer conversion rate:

Forecasted revenue = (Total leads * Sales Conversion Rate) * ROI per lead

Now, plug these numbers back into the normal ROI formula:

ROI = (Forecasted Revenue – Marketing Spend) / Marketing Spend

Example: You sell MRI equipment to hospitals and purchase a booth and sponsorship at a large trade show where your goal is to generate leads. You spent $100,000 on the sponsorship and earned 200 leads, giving you a customer acquisition cost of $500. If your average purchase value is $250,000, you could expect an ROI per lead of (250,000-500), or $249,500. If your lead to customer conversion rate is 5 percent, then you can expect 10 of those 200 leads to become paying customers, earning you $249,925*10, or $2,495,000 in forecasted revenue. Since you spent $100,000, that leaves you with an ROI of .025 percent.

But what about attribution for multichannel campaigns?

As a marketer, you know that in general, no campaign or marketing tactic makes money by itself. When calculating ROI for a marketing campaign, it’s important to decide in advance how (or if) you will factor in other touchpoints, and how much credit you’d like to give to them.

For example, if you’re running a single-channel direct mail campaign targeted at people who are unfamiliar with your brand, you can feel pretty confident giving 100 percent attribution to that channel — especially if you use proper tracking methods. However, if you’re running a promotional campaign that spans direct mail, email, and Facebook ads, you’ll need to decide if you want to calculate ROI by overall campaign spend, and/or break it down by channel.

To a large degree, this decision will depend on your resources. A holistic look at marketing spend in a multichannel campaign would definitely be easiest, but you’ll lose out out on important information regarding which channels performed best within the campaign. Breaking down the campaign by channel offers better insight, but requires more effort and resources.

What’s a marketer to do? At a minimum, calculate your ROI based on overall marketing spend. Doing so at least allows you to answer the question your stakeholders want answered most: Did this campaign generate revenue? From there, you can select an attribution model that can help you determine which channels contributed most to your ROI.

For more tips on attribution for multichannel campaigns, check out this post on how to dissect a marketing touchpoint.

Calculating ROI on marketing campaigns doesn’t have to be difficult. With a little prep work, you can choose and equation that works best for your campaign goals and business model.

Want to know your ROI from phone call conversions? Learn more about how CallRail makes it happen.

The post How to calculate ROI on marketing campaigns appeared first on CallRail.

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It’s par for the course when a product or service touts their amazing features and ease-of-use in their marketing website copy, their promotional materials, and their press releases. But in recent years, user reviews and testimonials have become just as important to customers as marketing collateral when it comes time to make a purchasing decision.

The same is true for call tracking software, which is why we pour a great deal of effort into speaking with real CallRail customers, and writing up their testimonials into case studies.

By speaking with the real people who use our service, we’re doing more than just conducting research around UX preferences or market sentiment. With our case studies, we get to learn exactly how our software is making an impact on the bottom line — both for our users and their clients.

Here, we’ll review some of our favorite agency ROI case studies, and explore how they used CallRail to deliver amazing ROI results for their clients. (Each case study will be linked at the top of its summary, so feel free to click through for a more in-depth read.)

1) Call tracking helps SalesX cut client’s CPL by 90%

The folks at SalesX, a Bay-area agency, are some of the best of the best when it comes to digital marketing. As an early evangelist of Google Ads (they even hired one of its creators to sit on their board), they’ve developed an impressive track record when it comes to using digital marketing best practices to boost a client’s business.

However, SalesX found that some of their clients were a little more old-school, and don’t rely exclusively on digital channels to drive revenue. For these clients, calls are a mission-critical channel.

“For us, [call tracking] was a critical part of our mission, because we want to be able to accurately track all sources of contact for our clients,” said SalesX Founder and CEO Joe Khoei. “And we found that for most of our clients, they were tracking form fills and web sessions and everything else, but not calls.”

In the case of one client, the top-to-bottom application of call tracking helped deliver some seriously eye-popping results: A Cost Per Lead reduction of more than 90 percent, coupled with a 35 percent boost to their conversion rate!

With results like that, SalesX’s clients can be confident that they’re earning amazing ROI — both on the money they’re spending on ads, and on what they’re spending to be a SalesX client.

2) NYC SEM proves 800% ROI for client, thanks to call tracking

This New York City-based digital marketing agency knew they were delivering seriously impressive ROI for their clients, but they had difficulty proving that new business was directly tied to the campaigns they were running.

By implementing CallRail for one of their clients, they were almost immediately able to prove that their relatively modest ad spend of around US $1,000 was bringing in tens of thousands of dollars in revenue for their client — anywhere between 500 to 800 percent ROI on their ad spend in a given month.

“I could immediately see that all the sales for these products were happening over the phone and I would never have been able to measure this through web conversions,” explained NYC SEM Marketing Director Darren Carter.

3) Wonderist boosts client’s monthly revenue by over 500%

Dentistry — like other medical businesses — is a specialized fields where calls are still crucial. Prospective patients rightfully want to speak to a real human before they commit to putting their health and welfare in your hands, so phone calls are sa primary channel when it comes to earning new leads and drumming up business.

Most dental offices take a piecemeal approach to marketing, hiring one firm for digital ad buys, another for web design, another for direct mailers, and so on. Wonderist, a San Diego-based dental marketing agency, understood that they could deliver both real value and cost savings to clients by centralizing all of these operations under a single roof, with call tracking as one of the central pillars of their marketing efforts.

And their results speak for themselves: By putting CallRail to work for one Pittsburgh-based client, they saw a 530 percent increase in monthly appointments year-over-year, along with a comparable increase in revenue — without requiring a huge increase to their marketing budget.

“Most importantly for us as an agency, the data from CallRail meant we didn’t have to sit on our hands and say, ‘Gee, I sure hope we were part of helping him drive all those new patients,’” explained Wonderist co-founder Michael Anderson. “We can bring that call tracking data to our client and demonstrate the direct role our advertising had in their success.”

4) FreeGren proves client ROI and increases leads and conversions by 40%

Client retention is one of the thorniest problems any digital marketing agency will face. At the Bellevue, Washington-based marketing agency FreeGren, they knew they needed a different approach to differentiate their business from the crowd.

And so, they adopted a forward-thinking strategy: Instead of focusing exclusively on big payouts from enterprise-grade clients, they would instead prioritize relationships with small-to-medium sized clients, especially those in markets with a high average transaction value.

In one memorable case, they knew that they were delivering great results for the client, but an absence of comprehensive analytics meant that the client wasn’t totally sold on the value of FreeGren’s services. But after a top-to-bottom implementation of CallRail into the client’s marketing stack, FreeGren was able to conclusively show how their campaigns for the client had directly resulted in a 40 percent increase in leads and conversions. (All in the space of only three months!)

And by delivering such excellent results, and providing total data transparency along the way, FreeGren is also boosting their own bottom line — they almost never lose a client to churn.

5) IVIO doubles client’s new customers on the same budget

You read that correctly: By implementing call tracking for a customer who previously had not been tracking any calls, this Phoenix-based legal marketing agency helped a client more than double their monthly business.

By using CallRail’s Keyword Tracking feature, IVIO was able to zero in on the Google Ads keywords that were driving the most calls and new business to a client. That, in turn, helped them focus their ad spend on the best messaging and most lucrative targeted audiences.

As a result, one of IVIO’s clients saw their number of monthly appointments more than double (going from 12 to 25), along with a corresponding increase in monthly revenue — all without having to spend a single extra penny on ad buys.

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While there may not be a magic bullet, one-size-fits-all solution for proving and improving agency ROI, these examples illustrate how the judicious use of call tracking and analytics can make a serious difference, both for your agency and your clients.

If you’re interested in exploring the benefits that call tracking can bring to your agency, you can start right now: Begin your 14-day free trial of CallRail, or request a personalized demo.

The post 5 agency success stories that prove the ROI benefits of call tracking appeared first on CallRail.