Oct 01

How to Prove the ROI of Content Marketing

ROI of content marketing

There is a perception in the marketplace about the facts around the ROI of content marketing. That it’s impossible to calculate. The fact is that finding and proving the (ROI) of content marketing can sometimes be tricky. However, it doesn’t have to be if you ask the right questions.

Here’s How

Here’s what you need to know to calculate the ROI and prove that it’s working:

CPL – cost-per-lead = What does it cost to get a lead? For example, we work with an independent insurance agency by helping them with their monthly email newsletter. Their monthly investment for our services is $295 for each newsletter. The email newsletter we send for them gets approximately 20-30 quotes per newsletter. (In the Insurance industry, quotes are exactly what they are looking for) So their CPL is less than $15 per quote.

CPA – cost-per-acquisition = What does it cost to acquire a paying customer? This is the next level after CPL. This number will include all the costs to acquire the lead plus the costs to turn that lead into a customer. Costs such as commissions to salespeople, travel and entertainment, a CRM system, etc.

Average Revenue per Customer = What is a customer worth to you? Every industry is different depending on purchase frequency, lifetime value of a client, average order size, etc. For example, we work with quite a few senior living communities. Their Average Revenue per Customer can vary from $2,000/month all the way to $10,000/month. Let’s go in the middle and say $5,000. So that locations average revenue for one customer in a year is about $60,000.

Prove Content Marketing

Now let’s deliver the cold hard facts and prove that content marketing is working. This will enable you to get away from the “truthiness” that seems to plague content marketing and its effectiveness.

Content Marketing Facts

Let’s take the independent insurance agency example. Their CPL with the email newsletter service is about $15. They told me that their average customer revenue is about $1,000 (they said it’s typically higher, but let’s just use $1,000). The investment for Mingle Media’s monthly email newsletter program is $2,270 ($500 setup fee + $295/m for a 6-month term).

Content Marketing ROI Funnel

We gave them this forecast in our proposal to them (based on previous experience) to help with their decision and we’re absolutely nailing these numbers for them. This model assumed that their average customer revenue was $1,000 (it’s higher) and that they closed 20% of the quotes generated (that % is way higher, but we like to underpromise and overdeliver).

So what’s their ROI?

Over the course of 6 months they get 165 new quotes. Of those 165 quotes, we assumed a 20% close so 33 new deals. 33 x $1,000 = $33,000.

In this scenario, they made an Investment of $2,270 to get a Return of $33,000. There are other expenses to consider to get the CPA, but wouldn’t you agree that spending $2,270 to get $33,000 is a healthy ROI? Perhaps I can answer that question by telling you that they are very happy with our email newsletter service and we have already started on other digital marketing projects for them. Want more proof? Check out this Content Marketing Case Study.

Imagine being able to take these numbers to the naysayers. Do you think their perception of content marketing will change?

In this example, we used an email marketing service to prove that content marketing works. Because of the massive amount of analytics tools available to every business, you can do the same thing with other forms of content marketing.

If you’d like us to create an ROI estimate for your business, email me directly at [email protected].

To your continued success,

Hendrik