🗞️ The Journey: Measuring MarTech ROI – How To Calculate The True Return On Investment
In this edition of ‘The Journey’ we’ll discuss how to measure Martech’s true ROI and share our own brand-developed ROI Calculator. Simply plug in your numbers and get a clear view of ROI multiples and payback period for your MarTech solution or vendor of choice.
The ability to measure ROI is amongst the top 3 factors marketers cite as the most important when choosing a Marketing Technology solution replacement and had the largest change across the years according to a recent MarTech Replacement Survey (50% in 2022 vs 34% in 2021)..
It shouldn’t come as a big surprise – while 2021 was all about growth at any cost, 2022 is about efficiency and profitability. Capital efficiency is forcing many companies to re-examine their expenditures, and marketing is usually the first department to be scrutinized.
Assessing Real Value and True Cost
As we’ve seen in the survey above, the ability to measure ROI is now a critical condition when deciding to onboard, replace or keep a certain solution. We see more and more marketers today prioritize solutions that can be directly linked to ROI.
However, the distance between the ability to measure ROI vs. actually measuring it can sometimes be quite significant. To help marketers perform an ROI analysis of their stack, we first need to uncover the different variables in the equation.
To assess the true cost of a solution, in addition to its financial cost, you have to take into account the time and effort it will require from your team. As 62% of marketers do not plan to hire new employees to operate the new tools (according to the same survey), the team’s time is actually more valuable than its nominal value as they will not be doing anything else during that time.
Here is a simple way to assess the ROI of a solution that is aimed at generating lift of some business KPIs:
- Vendor cost
- Operating cost (team hours X hourly salary)
- Implementation cost (team hours X hourly salary)
- Unit of value being uplifted (ex: SQL)
- Baseline (before uplift, for example, before onboarding the solution, the company generates 80 SQLs per month)
- $ value of unit
- Expected / observed uplift (in %)
MarTech ROI and Payback Period Calculator
With this approach it is possible to understand the true benefit that a MarTech tool can provide. Using this information, we have built an exclusive calculator that shows the payback period, in months, of the solution as well as the expected revenue uplift and ROI multiples. The calculator is customizable, allowing you to plug in your own numbers, such as unit of uplift (i.e. Leads, MQL, SQL, Opportunities, other), value per unit, baseline number prior to uplift, and costs associated with the new tool. As the default values, we have also included a feasible actual ROI that a typical customer can expect to get from Trendemon. Try the calculator today (It’s FREE!), and measure the true value of your MarTech tools and platforms.
How to Assess the Results – Industry Benchmarks
One of the key factors in measuring ROI is the payback period, but how can you evaluate and determine what’s considered a good/bad result? Is it below or above the industry’s average? To demonstrate some benchmarks for this metric: a “great” payback period for B2C is 1 month; 6 months for B2B SMBs; And 12 months for B2B enterprises.
Stay tuned for our upcoming posts in this series where we will take a deeper dive into the topic of ROI and measuring methodologies.
* Make sure to also check out our G2Crowd page to learn more about why Trendemon is named Best Estimated ROI in ‘Personalization Engines’ category at the G2 Summer 2022 Report.