“Determine you marketing return on investment so you can focus your efforts.”
Today we review calculating your marketing ROI and making improvements.
In construction we have many sources that we use to find projects to bid on. These vary from vehicle signs to lead services sending us opportunities. To improve our business we need to find which areas are working the best.
We need to calculate our return on investment (ROI) for our marketing dollars and effort. We want to understand what it costs us to find the projects to bid on and what it costs per project we win.
By calculating and tracking these important costs we can better determine where our bests leads are coming from. This will ultimately save us both time and money. If we are getting great leads that fit what we are looking for we can spend less time qualifying them.
[tweetthis]Determine you marketing return on investment so you can focus your efforts[/tweetthis]
To get this figured out properly we need to set up some metrics that we will calculate and track. The first if our cost per lead and cost pre customer. The difference being a customer is one we actually contract with and a lead is someone who we need to qualify. Sometimes you may find that one source gives you the best ROI on the lead but worst on the customer. For instance if you have a service that sends you 100 qualified leads per year yet you only win one project out of those 100 they may not be your best source or ROI.
Here is an example of what we want to calculate:
|Lead Service||Cost/Year||Leads/Year||Wins/Year||Cost Per Lead/Win|
From this example you can see that with this lead service you a spending $2,250 per project.
We need to do this process for each marketing channel we use so that we have a complete breakdown of our spend.
The second metric we want to track is net revenue per customer. To do this we only want to use our fee/profit for this calculation. Using the total contract value would not be calculating the return it would be gross revenue. That may be something you want to know as well but the real metric we need is our ROI. So if you projects average $50,000 and you have a standard profit of 5% then your net revenue is $2,500. We will use this number to gauge our performance. We want to work at widening the gap between the cost per customer and net revenue per customer.
So we need look at each channel to determine where we are getting our best return on our efforts. Then we can take steps to improve all of our channels. A key factor to calculating all this is making sure you add the time involved. Let’s look at another example.
|Cost/Year||Leads/Year||Wins/Year||Cost per Lead/Wins|
So in this example we spent double per lead versus the previous example but we spent less per win because we had better quality leads. That is the key here is understanding where we get the best results. In this case we are doing better with Facebook so we should look at how we can increase our exposure on that channel and generate more wins. Maybe if we put another 20 hours into it we would get 5 wins per year. Maybe we can outsource some of the content and shave the cost down.
There are many ways to make improvements but first we need to know what to improve. Calculating your marketing ROI is the first step in this process.
Set up some metrics around your marketing efforts (cost per project and net rev per customer are a must)
Determine which channels provide you the best ROI
Refine your efforts to supercharge your marketing