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 business’s growth ambitions. Are you aiming for a 15% revenue increase? To expand into a new market? Your marketing ROI targets must directly contribute to these outcomes. Don’t set marketing goals in isolation.
• Focus on Contribution, Not Just Revenue: Marketing rarely generates revenue in a straight line. Instead of expecting every dollar spent to immediately translate into sales, consider marketing’s contribution to the sales pipeline. For example, a lead generation campaign might aim for a specific number of qualified leads at a defined cost per lead.
• Customer Lifetime Value (CLV) is Crucial: Understanding how much a customer is worth to your business over their entire relationship with you is vital. A higher CLV justifies a higher Customer Acquisition Cost (CAC). Calculate your CLV and use it as a benchmark for acceptable marketing spend.
• Channel-Specific ROI: Don’t treat all marketing channels the same. Each channel – Google Ads, social media, email marketing, content marketing – will have a different ROI. Track performance at a channel level to identify what’s working and where to optimise.

Calculating ROI is straightforward: (Gain from Investment – Cost of Investment) / Cost of Investment. However, accurately attributing ‘gain’ can be tricky. We recommend using a combination of tracking tools, unique offer codes, and customer surveys to understand which marketing activities are driving results. Regularly analyse these results – monthly is a good starting point – and adjust your strategy accordingly.

Ultimately, setting realistic and aligned marketing ROI targets isn’t about hitting arbitrary numbers. It’s about making informed decisions that drive sustainable business growth. If you’re unsure where to start, begin by calculating your current CLV and then mapping your marketing activities to the stages of the customer journey. This will provide a solid foundation for setting meaningful targets and measuring success.