By Revenue is critical for stability and growth. But it’s only part of the story of your B2B technology company. You need to generate the right ROI. That's how you make a profit and understand the straight-line relationship between marketing and revenues.
We recently held our Global IT Webinar where we sat down with B2B technology company, Kinettix, to discuss their 20X ROI increase and how they achieved it. They established four essential marketing KPIs that every B2B company should track: traffic, leads, revenues, and ROI.
Below, we'll look at how they're tracking and calculating ROI, how they've established benchmarks, and what you can do to follow their lead and increase your own return on investment.
What Are the Benchmarks for ROI in B2B Technology?
The general rule for benchmarking ROI in B2B technology is this: your customer lifetime value (CLV) should be 3X your customer acquisition cost (CAC). In other words, for every $1 you spend acquiring a customer, you should expect at least $3 in revenues.
That's a 3X ROI.
It's important to note that for this measure, the CLV is the average revenues for the average customer minus the Cost of Goods Sold (COGS). The CAC is the total cost of sales plus marketing within a given period divided by the number of deals the sales team closed within that same timeframe.
Most consider 3X ROI a good benchmark because it allows sufficient funds for overhead, research and development, payroll, and other expenses. But it's important to realize that it takes time for a B2B marketing team to move B2B technology leads through a pipeline, converting them into leads, then nurturing them into sales qualified leads. Some ROI is delayed but it's all measurable.
With that said, every company is different. Kinettix started with this 3X ROI assumption. But they took clearly-defined steps to obtain a much higher ROI.
A Benchmark Is Just a Starting Point
Benchmarks give us a place to start. But we should never stop there.
ROI can vary greatly when you're trying to look at B2B marketing activities individually. Consider paid advertising marketing. Paid advertising ROI alone is notoriously low in B2B technology. On average, you'll pay $3-4 for one click, and only around 3% of those who click become customers. To get your ROI, you have to spread the LTV across the 3% who become customers.
Advertising is vital to your overall marketing strategy. But you're unlikely to achieve a 3X ROI with paid advertising alone.
In the webinar, Kinettix discusses how they incorporated inbound marketing and sales enablement as well as better marketing automation to more effectively measure the metrics that contribute to ROI.
Marketing automation, in particular, helped them understand what was possible for their B2B technology company and identify the areas where they could cut costs, improve efficiency, speed up the sales cycle, and increase revenues to earn that kind of ROI.
With this in mind, let's look at some of the steps they took to increase their ROI.
How to Multiply Your ROI
First, they deployed marketing automation to effectively measure each marketing KPI effectively.
Next, as mentioned, if you only use paid advertising, it's impossible to achieve a high ROI. Your CAC is too high.
Instead, they took a multichannel approach to reach customers in the various places they spend time. This increases awareness, engagement, and trust. A mix of pay-per-click and organic inbound marketing leverage works together to get better results than you could with either one alone.
This approach is supported by strong data. A Harvard study looked at the shopping behaviors of 46,000 customers. They found that 73% of customers interact with a brand across multiple channels before buying. It also found that the more channels a particular customer uses, the more they spend. Those who regularly use 4+ channels spend, on average, 9% more.
Channels might include 2-3 social media platforms, Google organic search, email, Google pay-per-click, webinars, and display ads.
Focus on creating high-value, relevant content across channels to build trust. This keeps your ideal customers engaged and moving through the Buyer's Journey efficiently. Awareness > Consideration > Decision-Making > Delighted Customer. The delighted customer leads to great reviews, direct referrals, social proof, and higher CLV.
Finally, use marketing automation for lead-scoring and hand-off. Through marketing analytics, you can identify the precise moment a lead becomes a high-priority sales qualified lead (SQL). Marketing can automatically complete a seamless sales hand-off. This supports marketing-sales alignment that further raises your most important marketing KPI, ROI.
