Understanding how marketing contributes to your bottom line is crucial, especially as your business evolves. Many Australian SMEs struggle to predict marketing ROI under different growth scenarios – whether that’s steady expansion, rapid scaling, or navigating a period of consolidation. We can help you build a flexible model to do just that.

The key is to move beyond simple last-click attribution. While knowing which ad directly led to a sale is useful, it doesn’t paint the whole picture. We need to consider the entire customer journey and how marketing influences each stage. Think about awareness campaigns building brand recognition, nurturing emails moving prospects through the funnel, and retargeting ads closing deals. Each activity has a cost and a contribution to overall revenue.

Here are a few insights to help you model this:

• Scenario Planning: Don’t just model for ‘business as usual’. Create scenarios – conservative (5% growth), moderate (15% growth), and aggressive (30%+ growth). Each scenario will have different customer acquisition costs and lifetime values.
• Customer Lifetime Value (CLTV): This is fundamental. Accurately calculating CLTV allows you to justify higher acquisition costs for customers who will generate significant revenue over time. Consider repeat purchase rates and average order value.
• Channel-Specific ROI: Don’t treat all marketing channels the same. Analyse the ROI of each channel (Google Ads, Facebook, email, content marketing, etc.) separately. Some channels are better for awareness, others for conversion.
• Marginal ROI: As you scale, the returns from each additional dollar spent on marketing will likely diminish. Modelling marginal ROI – the return on the *next* dollar spent – helps you identify when to shift investment to different channels or tactics.

To build a practical model, start with your existing data. Pull sales figures, marketing spend, and customer data into a spreadsheet. Then, adjust key variables (acquisition cost, conversion rates, CLTV) based on your growth scenarios. Sensitivity analysis – changing one variable at a time – will reveal which assumptions have the biggest impact on ROI. Remember to regularly review and refine your model as you gather more data and the market changes.

Ultimately, a well-constructed marketing ROI model isn’t about predicting the future with certainty. It’s about making informed decisions, allocating resources effectively, and ensuring your marketing investment drives sustainable growth for your business.