Marketing technology (MarTech) is no longer a “nice-to-have”; it’s essential for small businesses to compete. From social media tools to email marketing platforms, the options can feel endless. But are these tools really delivering value? It’s a fair question. You’re running a business, not a tech experiment.
Why Measuring MarTech ROI Matters:
For small businesses, every dollar counts. You don’t have the luxury of wasting money on tools that don’t perform. Measuring MarTech ROI helps you:
- Justify Spending: Prove to yourself (and anyone else involved in the finances) that your MarTech investments are worthwhile.
- Make Informed Decisions: Identify which tools are delivering the best results and which ones you might need to ditch.
- Optimise Your Strategy: Fine-tune your marketing efforts based on data, not gut feelings.
- Allocate Resources Effectively: Put your time and money into the MarTech that gives you the biggest bang for your buck.
The Basics of MarTech ROI:
ROI is a simple formula:
(Revenue Generated from MarTech – Cost of MarTech) / (Cost of MarTech x 100)
But it’s not always as straightforward as it seems.
Steps to Actually Measure Your MarTech ROI
- Set Clear Goals: What do you want your MarTech to achieve? More sales? More leads? Better customer engagement? Be specific. Instead of “increase sales,” aim for “increase online sales by 15% in the next quarter.”
- Identify Key Metrics: What data will tell you if you’re achieving your goals? This will vary depending on your goals, but here are some common ones:
- Website Traffic: How many people are visiting your site? (Use Google Analytics)
- Conversion Rate: What percentage of visitors are taking the desired action (e.g., buying something, signing up)?
- Lead Generation: How many leads are you getting?
- Customer Acquisition Cost (CAC): How much does it cost to acquire a new customer?
- Customer Lifetime Value (CLTV): How much revenue does a customer generate over their relationship with your business?
- Engagement Metrics: Likes, shares, comments (for social media), open rates, click-through rates (for email).
- Track Everything: You can’t measure what you don’t track. Make sure your MarTech tools are set up to capture the relevant data. This might involve:
- Setting up conversion tracking in your analytics platform.
- Using UTM parameters in your URLs to track where traffic is coming from.
- Integrating your MarTech tools with your CRM.
- Attribute Revenue Correctly: This is where it gets tricky. It’s not always easy to say which tool is responsible for a sale. Did the customer see your social media ad, then get an email, then visit your website? Consider:
- First-Touch Attribution: Gives all the credit to the first marketing interaction.
- Last-Touch Attribution: Gives all the credit to the last interaction.
- Multi-Touch Attribution: Distributes credit across multiple touchpoints (this is the most accurate, but also the most complex).
- Calculate and Analyse: Once you’ve got your data, plug it into the ROI formula. But don’t just stop at the numbers. Ask yourself:
- Why is this tool performing well (or poorly)?
- Can we improve our use of this tool?
- Is this tool sustainable in the long run?
- Regularly Review: MarTech ROI isn’t a “set and forget” thing. Review your results regularly (e.g., monthly or quarterly) and adjust your strategy as needed.
Examples of MarTech ROI:
- Email Marketing:
- Goal: Increase online sales.
- Metrics: Click-through rates on email campaigns, conversion rates from email traffic.
- ROI: Revenue generated from email campaigns minus the cost of your email marketing platform.
- Social Media Management Tool:
- Goal: Increase brand awareness and engagement.
- Metrics: Reach, engagement (likes, shares, comments), website traffic from social media.
- ROI: This is harder to measure in direct revenue, but you can look at things like increased website traffic, lead generation, and customer acquisition cost.
- CRM:
- Goal: Improve customer retention.
- Metrics: Customer lifetime value, customer churn rate.
- ROI: Increased customer lifetime value minus the cost of your CRM.
Tips for Maximising MarTech ROI:
- Start Small: Don’t try to implement every MarTech tool at once. Start with the essentials and gradually add more as needed.
- Integrate Your Tools: Make sure your MarTech tools work together seamlessly. This will improve efficiency and give you a more complete picture of your marketing performance.
- Train Your Team: Invest in training to ensure your team knows how to use the MarTech tools effectively.
- Focus on the Customer: Choose MarTech that helps you deliver a better customer experience. This will ultimately drive sales and loyalty.
Measuring MarTech ROI isn’t always easy, but it’s crucial for small business survival. By setting clear goals, tracking the right metrics, and regularly analysing your results, you can make sure your MarTech investments are paying off.
