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 overall growth. For example, “Marketing will contribute to 30% of the overall 15% revenue growth target.”
- Focus on Customer Lifetime Value (CLTV): Don’t just chase immediate sales. Understanding how much a customer is worth to your business over their entire relationship allows for more strategic investment. A higher CLTV justifies a higher Customer Acquisition Cost (CAC) and, therefore, a different ROI expectation.
- Channel-Specific ROI: Not all marketing channels perform equally. We analyse each channel – Google Ads, social media, email marketing, content marketing – separately. Each should have its own ROI target based on its role and cost. A lead generation campaign via LinkedIn will have a different ROI target than a brand awareness campaign on Facebook.
- Attribution Modelling: Understanding which touchpoints contribute to a sale is crucial. First-click, last-click, or multi-touch attribution models help us accurately assign value to different marketing activities. This isn’t about perfection, but about moving beyond simplistic assumptions.
Calculating ROI isn’t complex: (Revenue Generated – Marketing Cost) / Marketing Cost x 100. However, accurate tracking and consistent analysis are essential. Regularly reviewing performance against targets – monthly or quarterly – allows for course correction. Don’t be afraid to reallocate budget to higher-performing channels.
Ultimately, setting realistic and aligned marketing ROI targets isn’t about squeezing every last cent out of your marketing budget. It’s about making informed decisions that drive sustainable business growth. If you’re unsure where to start, a marketing audit to assess current performance and identify opportunities is a valuable first step.
