After implementing marketing automation (MA) in your company, you’ve probably wondered if the costs are too high. When taking any action, there’s always a concern that the planned changes won’t bring benefits that outweigh the various fees. Did you know that you can easily check whether the investment is paying off? It is a good idea to calculate ROI from time to time, and in this article you will learn how to do it.
What is ROI
The full name is Return on Investment. This percentage indicator will allow you to evaluate the effectiveness of a given campaign and compare it with others. To calculate ROI in Marketing Automation, you can use a standard formula, comparing the profits (benefits) generated with the investment (costs). The most important thing, then, is to accurately identify these parameters.
Identifying costs
When looking at ROI in marketing automation, the main thing to keep in mind is the fees associated with implementing the system, but also maintaining it in the future. In addition to the purchase of the software, you also need to add the costs of hiring specialists (such as the Marketing Automation specialist we blogged about here), salary payments, training and fees related to integrating the system with other tools. Investment in various upgrades and optimizations should not be forgotten either. There may also be other additional costs, such as technical support, for example.
Determining the benefits
To calculate ROI, you also need to identify the benefits. You can compare many of the activities that were previously performed without Marketing Automation to the changes that occurred with the implementation of this system. For example, when looking at revenue, the benefit could be an increase in sales due to personalized product recommendations, automated follow-up with leads and better email campaigns. In addition, marketing automation saves time – it reduces man-hours by automatically performing multiple employee tasks, resulting in cost savings. Marketing automation enables better customer segmentation and personalization of messages, which contributes to increased conversions.
ROI calculation formula
You have already determined the costs and benefits of implementing Marketing Automation in your company, so we will now show you a simple formula to calculate the ROI:
What does this mean in practice? Let’s imagine a simple example: thanks to Marketing Automation, revenues increased by 200,000$ per year, and savings on employees are 50,000$, so the total value of benefits is 250,000$. The implementation of the system was 100,000$, and annual maintenance is 50,000$, so the total cost is 150,000$. The ROI will be equal to:
The return on this investment was 66.67%, meaning every dollar spent brought an additional profit of 66 cents.
Monitoring KPIs – key performance indicators
Of course, you can’t determine the impact of marketing automation based on contrived data. It is worth tracking KPIs, such as:
- Conversion improvement – Did conversion increase after implementing Marketing Automation?
- Higher customer value (LTV) – Has the value of purchases increased?
- Lower customer acquisition cost (CAC) – Has the cost of acquiring a new customer decreased?
- Increased number of leads – Did marketing automation increase the number of leads?
Summary
Calculating ROI allows you to determine whether a particular investment was associated with outperforming returns. Using a simple formula, you can check the financial results you got from using Marketing Automation. Remember to monitor the ROI, for example, quarterly or annually, and precisely determine the benefits and costs each time, using KPIs, among others. This will allow you to assess the long-term impact of marketing automation. You will now know that it was a good investment.
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