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The 3 Growth Conversations for Meaningful ROI on Marketing
Return on investment as most readers know is this basic formula:
($return-$investment)/$investment*100=% return on investment
The equation is simple. But how big is your investment going to have to be to generate a return? One could make a guess. Or look at how much was spent last year. Or take a basic percentage of current revenue or gross profit or net income. There are lots of ways to decide what to spend. But there’s only one way to manage your marketing and marketing spend that guarantees a return on your investment. And that is, before you invest in marketing, have the following three conversations with your in-house team or agency.
Growth Conversation #1: Where will your growth come from?
To start, answer the following question: Where will your business’ growth from over the next 3 months? What about 6 months? And longer?
At a high-level there are three possible answers:
- I need to get more new customers.
- I need existing customers to buy more from me.
- I need to upsell existing customers higher-value products.
Each of these answers has a different set of options in marketing strategy, planning and execution. If you don’t know what drives your growth – how is it possible to get a return on your marketing investment?
Growth Conversation #2: How well do you know your customers?
The first conversation on growth uncovers the path to growing your business, the second growth conversation connects the path to your customer. The following three questions help make that connection.
Do you have an ideal buyer persona that goes beyond demographic data?
The ideal buyer persona demonstrates how well you know your audience and includes psychographics as well as demographic attributes. However, if you’re not collecting data on your customers, it will be hard to know if you got that persona right.
Do you consistently measure your marketing message across the sales funnel?
You can’t manage what you don’t measure. Across the entire marketing funnel – from awareness to interest to purchase – what data are you measuring? Is that measurement aligned with the sales cycle to enable optimization?
Do you have proof that your message resonates?
Quantitative, empirical data needs to show how your audience responds to the messages you communicate to the marketplace. Message delivery happens in many ways – paid advertising, owned content, emails, social media, conferences, events – but to be effective you need to know who you are reaching, who is listening, and how they are responding to those messages
Growth Conversation #3: Set your priorities.
No company, not even the largest, has unlimited resources for investing in growth. The priority-setting conversation needs to focus on two critical aspects – money and time. The budget you establish is the investment side of the equation when calculating your return. The size of your budget is going to be determined by different factors such as the kind of company you’re in, the size of your company, the opportunity size, the goals identified in the first growth conversation, and the realities of where you are now uncovered in the 2nd growth conversation. Tactics and their respective costs will evolve based on the answers cultivated earlier.
Round out this third conversation by looking at your timeframes. What are you trying to accomplish in the next 30-90 days? Six months? Twelve months? Is your investment suitable to deliver in that time? All these questions are answerable – but to answer them you must set your priorities. If your focus is 12 months from now, establishing a budget to deliver a 12-month goal, but only give it 90 days that doesn’t make a lot of sense. On the other hand, if you have immediate-term needs within the next quarter, you’re better off focusing on the short term. Make sure your budget and timing align with where your expected growth is going to come from! Remember, if your marketing doesn’t focus on the customers that will drive your growth, your likelihood of generating a return on your marketing investment is very slim.
These three growth conversations are the foundation on which to build a marketing strategy, plan and budget that delivers on your target objectives and is (almost) guaranteed to generate a positive ROI – which will make you, your team, and your senior management very happy.
