• Steven Johnson

The Basics of Determining B2B ROI

According to Hubspot, only 35% of marketers said that understanding the ROI of their campaigns is "Very Important" or "Extremely Important." We're unsure why this number is so low. Many marketers may be very busy and know that their content strategy is working on some level, so getting the exact ROI numbers isn't that important.

However, this can lead to what we like to call "the spaghetti strategy," throwing everything at the wall and seeing what sticks. The spaghetti strategy is used by companies more than you may think, resulting in wasted resources on ineffective content.

It's just as likely that some companies simply don't know how to calculate their content marketing ROI, so they don't bother at all. But, determining a particular strategy's return is the only way to plot truly effective future content marketing roadmaps.

Determining ROI

There are many complicated success metrics and KPIs that marketers use to try and measure returns. It's often a convoluted process that leads to confusion.

Here I'll try to apply the classic return on investment formula of (return-investment/investment) to get the percentage return on investment of a content marketing strategy.

The good news is that calculating ROI for B2B companies is more straightforward than for B2C companies. It's because you can track everything from the entry point of the lead, up to the sale's closing with the sales team member.

The bad news is there's not a great way to predict the potential return for a content strategy when it comes to B2B companies, especially ones in the food industry. There's not much data on B2B average conversion rates or average SEO lead-to-sales conversion rates.

If you could figure those out, you could plug them into the formulas below to get an estimated amount of sales for a given content strategy.

Website Traffic x Avg Traffic-to-Leads rate = Estimated Leads

Estimated Leads x Ave Lead-to-Sale rate = Estimated Sales

But, as the saying goes, you can't make an omelet without breaking a couple of eggs. So why not start small and see if your content strategy gives you the returns you want?

We'll take the odds that they will.

Step 1: Figuring Out Your Costs

For this example, I'll try to use a content strategy with as few moving parts as possible so that it's easier.

Here is a simple strategy that many B2B companies use.

1. Increase relevant blog content to two posts per week containing high-performing keywords to drive traffic to the site.

2. Create a lead magnet (say a white paper) to access the lead's email address.

3. Ask leads who read the blog to download the white paper and to sign up for your company newsletter as a lead nurturing tool.

So, we are accounting for the actual content cost of the twenty-four blogs, the white paper, and a newsletter.

If you were using staff writers for this content, you would measure the amount of time this content takes to create, multiplied by an hourly rate based on their salary. You would also include an overhead factor that your company uses.

But to avoid all that, we'll say that you outsourced this content to a freelancer that charges a flat rate per project.

The freelancer charges $250 per blog, $3500 for a white paper, and $400 a month to maintain a weekly newsletter.

Next, you'll want to calculate the monthly cost of this content.

Newsletter = $400

Blog = 24 x $250 = $6000/12 = $500 (Assuming a lifespan of one year)

Whitepaper = $3500/12 = $291.67 (Assuming a lifespan of one year)

Total= $1,191.67

Step 2: Figuring Out Your Profits

Now we're going to have to make up some numbers here to calculate the return. I'll use some conservative conversion rates based on what I have seen in the past.

By tracking click-through rates, the blog posts drive 100 people per month to your newsletter.

You track an average of 75 people download your white paper through specific URL visits to its landing page.

Subscribers two your newsletter become customers at a rate of 2% over time.

Through customer surveys, you find that an average of 8% of people who downloaded the whitepaper made a purchase.

Let's say you're a customized walk-in cooler and freezer company, and your average customer spends an average of $10,000.

Your profit margins are 14%. So each customer is worth $1,400.

Your newsletter yields two customers a month (100 x .02 = 2).

The white paper yields six customers a month (75 x .08 = 6).

Giving you a total of eight new customers a month at $1,400 gives you a monthly profit of $11,200.

Step 3: ROI Formula

ROI= (Total Monthly Profit from Content – Total Monthly Content Cost/Total Monthly Content Cost)

ROI= 11,200 – 1,191.67/1,191.67 =840%

Some Things to Consider

Looking at this return on investment might get you salivating to start churning our more content. And rightly so.

Just remember, content marketing is a slow-moving process. Companies that don't have a strong online presence can expect a content marketing strategy like this one to take around six to twelve months to see results.

Companies with a robust online presence and have high site traffic numbers might see returns quicker.

The same is true for both onsite and off-site content marketing strategies.

We advise against off-site content as it is less predictable and can wind up costing more money. Here's an article from the Content Marketing Institute that agrees with my stance.

Either way, it takes time for Google to find and rank your content. In turn, it takes time for people to find your content organically.

On a related note, the content you create has to be highly relevant to your audience. This is where keyword research and customer experience touchpoints come into play.

Another strategy is to use paid search or social media ads to get your content in front of more eyes faster. It's not a bad idea if your company can afford to pay and decrease its ROI.

The bottom line is once your content marketing strategy gets up and rolling, the returns compound over time. If you stay in Google's good graces by consistently putting out engaging, meaningful content, you'll continue to rank in the search results. The amount you invest in the content will stay the same, but it will yield higher returns.

The more you invest in your content, the more you get back. It's the IRA of marketing.

If your company is looking for a content strategy with a high rate of return, don't hesitate to get in touch with us to schedule a call.

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