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You’ve probably heard us talk a lot about Inbound Marketing, so you may have an idea about what it is and why you need it. Chances are, you were surprised to discover how much work is involved in running a successful inbound campaign. That's where SMS comes in to make your life a little easier. We do the heavy lifting so you can get to inbound marketing ROI faster.

I know what you're thinking. As a busy company leader, I feel it too.

Your marketing team is already busy, your budget is strapped. How do you take digital marketing by the horns and feel confident that you are making the right investment?

Let's discuss every CFO's three favorite letters... R - O - I.

First, What is ROI?

"Hey, that thing we spend money on... how well is it working out for us?"

Return on Investment (ROI) is a performance measure that evaluates the efficiency of an investment. A return (The benefit you get from that which you invested in) is divided by the investment (or dollar amount of the thing you spent money on) equals the ROI percentage or ratio.

We're going to show you how to do this below with a real-life example.

But first, Inbound Marketing is an investment, not a cost.

Before we go too far, it’s important to distinguish the difference between an investment and a cost. Many of our customers and prospects ask us, "How much will this cost?" to which we reply, "We recommend investing X dollars in order to reach your goals".

Inbound Marketing is not a cost to your business. Cost implies that you will not get your money back. Cost is something you purchase and never see again. It's toilet paper or coffee.

You don’t just use Inbound Marketing once and flush it away.

When you invest in your brand's identity and position online, you are making the most important investment decision in your business. It has the ability to create massive returns for years to come.

Will this impact your cash flow? Your budget? Definitely.

What makes it even more difficult is that you many not see the returns necessary to pay for your investment for six to 12 months... patience will be required. The way search engines work today intentionally rewards the brands that stick around for long periods of time; producing content, getting good customer reviews, social engagement, and consistently driving traffic. On the flip side, it is much more difficult (and expensive) to climb your way to the top of the search results. Google rewards those who are patient

Inbound marketing is not a commodity! Think of it like purchasing real estate. By investing in "online real estate",  you will see both short-term and long-term gains.

Let's talk numbers 

To give you an idea of the ROI you can expect to see from Inbound Marketing, we need some existing data. From there, we will be able to extrapolate a reasonable plan for growth and return.

  1. First, we need data from you about your current website performance and sales numbers.
    • How many monthly visitors does your website currently have?
    • How many leads does your existing website produce?
    • How many of those leads turn into customers?
    • What is the average monthly sales amount per customer?
    • What is your company’s profit margin?
  2. Then, we’ll estimate the increase in leads for your website, based on real data from actual companies who implement similar Inbound Marketing strategies as we do for our clients.
    • Month 1: 0.0X increase in website leads
    • Month 6: 1.9X increase in website leads
    • Month 12: 3.8X increase in website leads
    • Month 24: 7.3X increase in website leads


Inbound ROI: Apply the Math to Your Numbers to Forecast Results

We can use some easy numbers for our example. Let’s assume the following:

  • your website gets 3,000 visitors each month
  • with 60 of those visitors becoming leads (2% visitor-to-lead conversion rate)
  • and a 20% close rate = 12 buying customers
  • We’ll use an average monthly sale total of $2,000
  • 12 Customers x $2,000 = $24,000 per month in revenue growth
  • A profit margin of 30% = $7,200 of net growth!

With these numbers, let's calculate the ROI for an Industrial Supplier utilizing the SMS Growth Package featuring HubSpot marketing software and allocating 10% of their digital spend for social media advertising:

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Month 1

  • Assuming 0.0X increase in website leads

  • Gross (no increase) = $7,200/month

  • Investment: $8,270/month (SMS Growth Package + Software + Advertising)

  • ROI Calculation: $7,200 / $8,270 = 87% (-$1,070)

Month 6

  • Assuming 1.9X increase in website leads

  • Gross Increase = $13,680/month

  • Investment = $8,270/month (SMS Growth Package + Software + Advertising)

  • ROI Calculation: $13,680 / $8,270 = 165% ($5,410/month)

Month 12

  • Assuming 3.8X increase in website leads

  • Gross Increase = $27,360/month

  • Investment = $8,270/month (SMS Growth Package + Software + Advertising)

  • ROI Calculation: $27,360 / $8,270 = 331% ($19,090/month)

Month 24 

  • Assuming 7.3X increase in website leads

  • Gross Increase = $52,560/month

  • Investment = $8,270/month (SMS Growth Package + Software + Advertising)

  • ROI Calculation: $52,560 / $8,270 = 635% ($44,290/month)

 

Nothing in business life is a sure thing, and while we cannot guarantee you will see these exact results, we are confident in the investment. The timeline might change, the return might change... but growth is coming when you invest in your digital footprint.

Try it yourself - with our ROI Calculator Tool!

Bonus: The Benefits of Outsourcing

We've talked with a lot of industrial suppliers and distributors over the years, and while there are generally a lot of similarities, one thing that is very different is how they staff their marketing departments.

Some companies are extremely lean, staffing only one or two full-time marketing specialists. These companies choose to outsource the majority of the work (or sadly, not do the work at all). Others, have seemingly bloated teams (some that would make you question the ROI on the team itself). 

There are several pretty compelling benefits to outsourcing your digital marketing to a team of specialists. Here's just a few of those reasons:

1. Reduce Your Overhead Costs with Less Full-Time Staff

If you are one of the industrial suppliers I mentioned above carrying a bloated marketing team, take a deep breathe. This might be difficult to hear, but you could potentially save your business tens of thousands of dollars by outsourcing the same work to an agency.

The reason for this is because an agency (like SMS) has to be extremely efficient to be profitable. We have detailed processes, time-tracking, and project management systems in place to ensure that not a minute is wasted. The reality is that our team of specialists are trained to do inbound marketing and can output a similar or even greater amount of work for half the cost of your full-time staff.

If you are looking to add inbound marketing to your brand's growth strategy but you do not currently have the resources to execute, you might be looking to either hire an agency or hire two or three full-time staff. If you choose to hire internal staff, you will need the following:

Full-Stack Web Developer
Handles your website design, back-end maintenance, technology, and software implementation.
Full-time: $55K - $85K annually

Marketing Manager
Responsible for strategy, project management, social media, advertising, communication, and reporting.
Full-time: $45K - 65K annually

Content Specialist
Responsible for writing website copy, blog articles, premium content, email, and social content.
Full-time: $45K - $65K annually

Graphic Designer
Responsible for designing content, social media, premium content, images, etc.
Part-time: $18K - $22K annually

In case you don't feel like doing the math, here's what that looks like once you add 30% for overhead: 

Internal Staff ($260k avg) + Software ($24,k) + Advertising ($10k) = $294,000 per year

Using our premium package, here's what it looks like to outsource the same work to SMS: 

Flourish Package ($102k) + Software ($24k) + Advertising ($10k) = $136,000 per year

2. Working with Industry Specialists = Better / Faster Results

Perhaps one of the best benefits of working with an agency that specializes in the same industry as you is their experience they are going to bring to the table. Because SMS has already helped other companies like yours transition to inbound marketing, we know what to expect.

The path is already well-mapped. We've made some mistakes along the way and we've learned from them. No need for you to make the same mistakes. When we make a process change or we see a creative breakthrough because of our work with another client in the industry, we can pass along the benefits to all of our clients.

3. A Refreshing Increase in Transparency and Accountability

Ever had an internal project take three times as long as the team originally promised?

Are you given vague answers to seemingly simple questions regarding timeline, budget, and scope of work?

If you've ever had to work with internal teams, you know the answer is all too often yes.

It's unfortunate and frustrating, but the truth is that coordinators of internal teams have the ability to hide from accountability and manage to avoid repercussions for missing deadlines for important deliverables. The reason is because the cost to the organization is often buried in the organization's costs for goods sold. The expenses (staff) are right there next to sales, accounting, and even ownership, so it doesn't seem like an item that can be cut, reduced, or outsourced. Many times, entire departments become "untouchable", and that could be costing you thousands at the bottom line. 

With a significant portion of your budget outsourced with an agency, it becomes extremely important to report progress and ensure that your company is achieving a return for their investment. This is important not only to our clients, but it's important for us as an agency to be as transparent as possible and to work hard to achieve results.

The reason is two-fold. First, and this is most obvious, but we want to have a job next year... and the year after (job security). But we also care deeply about reporting on our results because we want to earn more and more of your business. Jesus said, "One who is faithful in a very little is also faithful in much". We believe that if we can prove our ability to be trusted with helping grow the business, our clients will be happy and invest more with us. 


We invite you to plug in your own numbers and do an ROI study of your current digital marketing efforts, and those you may be considering outsourcing to a professional agency, like SMS.

What did you find?

Let us know in the comments below, or schedule a consultation today to talk about how you can grow your business online with SMS. 

Inbound Marketing ROI Calculator

Topics: Inbound Marketing, roi

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