How To Calculate Inbound Marketing Goals, Step-By-Step
Here’s some data from HubSpot’s State of Inbound 2016 report:
72% of marketers who calculate inbound marketing ROI have confidence in their organization’s marketing strategy; of those who don’t calculate ROI, that number is only 49%.
Hmmm… how can any percentage of marketers know that inbound is or isn’t effective when they haven’t measured it one way or another? Here’s more…
58% of marketers who calculate ROI said the decision to increase their marketing budget was based on past success with inbound (only 24% of those who don’t calculate ROI could say the same!)
Wouldn’t it be nice to have a tangible way to prove your department’s effectiveness during budget season?
Companies that are seeing the most success with their inbound marketing collect and use data regularly. Because data means control—control over your marketing strategies, control over your effectiveness, and control over your budget. So if you’re not currently measuring your inbound marketing ROI with hard numbers, now’s the time to start.
Get Ready, Get Set…
In this post, we’ll show you an easy way to create specific, measurable, and attainable inbound marketing goals so you can target your efforts and make inbound work for you. The formula requires specific numbers as they relate to your own company, so before you can get started, go find the following information (then come back!):
Make a compelling case for inbound marketing at your company with our easy inbound marketing results calculator.
- Your company’s business goals. The purpose of inbound marketing is to support business growth, so the goals you’re measuring should support your company’s larger business goals. (If you don’t know them, tell your boss that 69% of the highest performing companies rank communicating business goals as the most effective way to build a strong team.)
- The following conversion rates*:
- What percentage of visitors to your website typically convert to leads?
- What percentage of your leads typically convert into sales-qualified leads (SQLs)?
- What percentage of your SQLs turn into customers? (Get your sales team involved here—when sales and marketing work together, good things happen!)
*If you don’t have this information handy, you should first spend time analyzing the data you have available. Whether it’s eight months of data or three, identify the number of visitors, leads, SQLs, etc. over time and use those figures to construct these conversions. (If you’re really interested, here’s a list of invaluable KPIs you should be tracking for long-term success.)
All set? Here goes…
Go! Steps To Calculate Your Inbound Marketing Goals
Step 1: Determine a specific, measurable, and attainable marketing goal that feeds into the business goal.
Let’s say a typical sale from your company to another is worth a million dollars. This year’s business goal is to grow the company 10%, which means bringing in an additional revenue of $10 million over the next 12 months. Your inbound marketing goal should play into that figure. Since inbound will be only one source of leads, claim a slice of that growth to put inbound to the test. For instance, a goal of generating $3 million with inbound translates to about three customers. This goal is specific, measurable, and attainable and, if reached, would contribute its share toward the total goal of the business.
Note that we’re starting at the bottom of the sales funnel. The next step is to begin building up the funnel from there.
Step 2: Determine how many SQLs you need to gain three customers.
Sales-qualified leads are leads that are accepted by your sales team as having potential to become a customer. What that means to your company specifically should be well-defined and managed by you—what actions would someone take that indicate interest in your company? They might include filling out a particular form (or multiple forms) on your website, asking for a free trial or demo, initiating contact, or any combination of those actions. Whatever those activities are, they’ve been designated by you as a good indicator of relatively high-level interest. Not every lead converts into a sale, though, so this is where your historical conversion rates come into play. If you give a lead to your sales team, what’s the likelihood that he or she becomes a customer?
Let’s say that your historical conversion rate is 10%—about 1 out of every 10 leads actually become customers. In order to get three customers, then, you’ll need 30 SQLs.
Step 3: Determine how many leads you need to gain 30 SQLs.
Moving up the funnel again, look at your lead-to-SQL conversion rate. How many leads will you need to get 30 SQLs? If we stick with our 10% estimate, you’ll need 300 leads to get 30 SQLs.
On to the final step…
Step 4: Determine how many website visitors you need to get 300 leads.
At the top of the funnel is website visits. A typical visit-to-lead conversion rate could be anywhere from 0% to 4%, so in this case let’s go with 1%—for every 100 people visiting your website, one person fills out a form. So you’ll need 3,000 visitors to get 300 leads.
The funnel is complete, and your goals for each stage are set. You’ve done it!
A Quick Review
Step 1: Determine a specific, measurable, and attainable marketing goal that feeds into the business goal (in this case, closing three customers).
Step 2: Determine how many SQLs you need to gain three customers (30 SQLs).
Step 3: Determine how many leads you need to gain 30 SQLs (300 leads).
Step 4: Determine how many website visitors you need to get 300 leads (3,000 new visits).
If all conversion rates stay the same (they may not), you’d need 3,000 new visits to get three new clients.
Evaluate, Revise, & Repeat
Making these goals is an important first step not only in determining the value of your inbound marketing strategy, but also in contributing directly (and measurably) to your company’s business goals. After all, if you’re not doing that, then what’s the point?
Constructing your inbound marketing goals in this way also reveals clear points of failure and success.
Maybe you were successful in converting 10% of your leads into SQLs, but you simply never got enough quality visitors to your site in the first place. How can you improve your current efforts on that front? Or maybe the weak link was converting SQLs into customers. A genuine conversation with your sales partners might prompt suggestions that boost the quality of leads or make the sales process more fruitful.
Another benefit of performing these calculations is that you’ll come out on the other side with a better idea of the pacing required to hit your goals. If, for example, you need 3,000 visits in three months instead of 12 months, you’ll have to create a lot more content within a very short time frame in order to reach that goal.