How Do You Project Marketing ROI Before You Spend?

How Do You Forecast Marketing ROI for a Campaign?

Forecast marketing ROI for a campaign by carrying the proposed spend through each step a buyer takes, from visit to lead to customer, and ending in gross profit, so every figure in the projection traces back to a rate someone can check.

1. Start from the spend and what it buys: the budget divided by the cost per click or per visit you expect gives you the visits.
2. Multiply the visits by your visitor-to-lead rate, the share of visitors who fill out a form, call or ask for what you offer.
3. Multiply the leads by your lead-to-customer rate from the CRM, counting signed customers rather than the ad platform's conversions.
4. Multiply the customers by gross profit per customer, the profit left after the cost of delivering the work, on the basis finance uses, first year or lifetime.
5. Divide the spend by the projected customers to get the cost per customer, which is the number you will test against what a customer is worth.
6. Build a low, base and high case by moving the rates you are least sure of, and mark each input as measured or assumed.
7. Set a checkpoint for each assumption, the date by which an actual figure will replace it.

The projection ends in the same ROI formula you'd use afterwards, which how to measure digital marketing ROI sets out, so build it in the terms your CRM reports (visits, leads, signed customers and gross profit by channel) and the Channel Selection step can check it line by line, while for SEO how to forecast SEO results covers the different inputs. To carry the projected customers into a company-wide revenue number, how to forecast revenue adds current customers and open deals to the same calculation.

Where Do the Conversion Rates Come From If You Have No History?

Conversion rates for a projection come from your own history wherever you have it and from a stated assumption wherever you don't, because a rate borrowed from another company's funnel describes their buyers, their pages and their sales follow-up rather than yours.

• Cost per click or visit. Use your own account for channels you've run, and for a new search campaign use Keyword Planner, whose estimates Google says draw on historical search data and your bid, budget, seasonality and ad quality,¹ labeled as Google's estimate rather than a measured rate.
• Visitor-to-lead. Use the rate of the page the traffic will land on rather than the site-wide average, because a page built for one buyer and a general home page can convert at rates far apart, as the example below shows.
• Lead-to-customer. Use your CRM for leads from a similar source, since a referral and a cold ad click rarely close at the same rate. What is a good lead conversion rate covers why published benchmarks for both rates disagree so widely.
• Gross profit per customer. Take the margin by offering from finance and how long customers stay, which how to calculate customer lifetime value walks through.

When an input has no history, label it as an assumption, say where it came from and give it the widest spread in the range, because in our experience a CFO accepts labeled assumptions more readily than hidden ones.

What Does a Marketing ROI Projection Look Like for One Quarter?

A marketing ROI projection for one quarter fits in one table: spend, visits, leads, customers, cost per customer and gross profit, with every rate labeled as measured or assumed.

The gap between the two cases is the reason to show a range at all, because the rates that move the result most are often the ones nobody has measured yet.

What Is a Good Projected Marketing ROI?

A good projected marketing ROI is one where the projected cost per customer sits comfortably under what you can afford to spend to win a customer, and no fixed percentage works for every business, because that amount depends on how long customers stay, how early their profit arrives, how much cash you can tie up while you wait and how fast you're trying to grow.

That is why we test a projection against a ceiling worked out for your own customers, which the Channel Selection page walks through, rather than against a benchmark ROI.

A projection at today's spend also assumes the rates hold as the budget grows, and in the accounts we review they usually don't, so project large increases in steps and test the cost of each added customer against the ceiling, as the Marketing Action Plan page shows with the contractor's LinkedIn spend and its onboarding limit.

How Do You Check a Marketing ROI Projection Once You Start Spending?

Check a marketing ROI projection by replacing each assumption with an actual in the order the data arrives: cost per visit first, then visitor-to-lead, then lead-to-customer, and gross profit per customer last.

1. Cost per click and visits, within the first few weeks, from the ad platform.
2. Visitor-to-lead rate, once enough visits have arrived to count, from your analytics and the CRM.
3. Lead-to-customer rate, after a full sales cycle, from the CRM. Google notes that conversions can be reported up to 90 days after the click and advises checking date ranges that ended at least 30 days ago,² so the most recent weeks will look worse than they are.
4. Gross profit per customer, once you know the size of the customers you signed, which is the input we see revisited least often.

When the actuals fall below the low case, stop and find which rate broke before spending to the end of the period on the original plan, because a projection's main job after launch is to show early which assumption was wrong.