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Growth Funnel & Marketing ROI
How To Track Your Business Growth Funnel
To grow your business in meaningful ways, it’s important to understand what your business growth funnel and marketing ROI look like. Then you need the ability to track it, and visualize it.
Most of the time, the funnel starts at a high level with impressions you’re making with marketing efforts. It can also be connections you make organically via search, being listed in on-line directories, etc.
The funnel then narrows to prospects who engage you in some way. This is often a website visit, a phone call, text message, e-mail, or a physical visit to your place of business.
At the next stage, prospects convert in some way that moves them further through the sales process and closer to becoming customers (or they become customers). Conversions might be appointments, estimates, orders…
Here is a quick visualization of how you can document your own growth funnel:
Tools like Google Analytics and Google Tag Manager allow us to track these behaviors and report them in meaningful ways. We commonly build a visualization of this growth funnel in Google Data Studio so that it’s watchable in real time. If you have an existing Customer Relationship Management (CRM) platform, these will often offer the ability to do similar reporting.
How To Calculate Your Marketing ROI
Once you’re able to track conversions and sales growth, it’s possible to calculate your ongoing marketing ROI.
There are as many opinions on how to calculate return on investment (ROI) as there are consultants to help you do it. We keep it VERY simple. Our belief is that if you invest in marketing this month, you should be able to know you got a near-term return on that investment, PLUS the more intangible aspects of marketing, such as brand awareness.
So we developed what we call Simple Return On Investment, or Simple ROI. Here is the formula:
If you know your incremental sales tracked back to each marketing campaign, you can simply use that, apply your gross margin (to remove the variable costs of sales), and calculate marketing ROI.
If you can’t follow prospects all the way through to the sale, but you know your closing rate and average revenue per transaction, you can arrive at a similar number and calculate your estimated marketing ROI.
The goal is to understand what’s making you money in your marketing strategy, what isn’t, and make adjustments.
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