Many Australian SMEs struggle to connect marketing spend to actual business growth. It’s not enough to simply track website visits or social media likes. We need to define marketing Return on Investment (ROI) targets that demonstrably contribute to increased revenue and profitability. The key is alignment – ensuring your marketing goals directly support your overall business objectives.

Here’s how we approach setting effective marketing ROI targets:

• Start with Business Goals: Before looking at marketing, define your revenue growth target. Is it 10%, 20%, or more? This is your north star. Marketing ROI targets must be framed as a percentage *of* that revenue goal, not as isolated marketing metrics.
• Customer Lifetime Value (CLTV) is Crucial: Understanding how much revenue a customer generates over their entire relationship with your business is fundamental. A higher CLTV justifies a higher Customer Acquisition Cost (CAC) and, therefore, a different ROI expectation. We often see SMEs underinvest because they don’t fully appreciate long-term customer value.
• Channel-Specific ROI: Not all marketing channels perform equally. We recommend setting individual ROI targets for each channel – Google Ads, Facebook, email marketing, content marketing, etc. This allows for optimisation. For example, a highly targeted email campaign might aim for a 300% ROI, while a broader brand awareness campaign on social media might accept a 100% ROI.
• Focus on Incremental Revenue: Instead of attributing all sales to marketing (which is rarely accurate), focus on the *incremental* revenue generated by your campaigns. This means comparing sales during a campaign period to a baseline period without the campaign. This provides a more realistic view of marketing’s impact.

Remember, ROI isn’t just about cost versus revenue. It’s about efficiency. Are we getting the most ‘bang for our buck’ from every marketing dollar? Regularly analysing performance against these targets – monthly or quarterly – allows for course correction and ensures marketing remains a powerful engine for business growth. Don’t be afraid to adjust targets as you gather more data and refine your understanding of your customer base.

The next step is to calculate your current CLTV and baseline revenue figures. This will provide the foundation for setting realistic and impactful marketing ROI targets that drive genuine business results.