121: Managing your Marketing ROI

1. Obtain a healthy marketing ROI. When you have a healthy marketing ROI, you are not spending more to bring on new business than the new business brings in revenue for you. You do not want to spend more to get new customers or clients than you’re going to make from that business.

2. You don’t have to be a CEO to understand ROI. Tracking ROI can be as simple as creating an Excel document or a Google Sheet. Start by noting how much you’re spending and what is the value of each transaction client.

3. You often have to be patient in waiting on your ROI. There are many marketing efforts, such as speaking events, word of mouth or even sponsored ads, that take time to see the results. Be patient. Track these efforts on a monthly basis. And pivot when needed.

Amy Appleton:

The most important thing that we’ve learned is you have to know your client. You do. You have to know your customer. You have to know what it is that you bring to that customer that no one else can. And you have to know where they are. What makes a difference to them. Because if you don’t get that piece right, then the ROI gets really hard to make positive.

Ryan Fitzgerald:

Welcome to One Next Step, the most practical business podcast in the world. You’re now one simple tip, practical tool and small step away from growing your business. One Next Step is brought to you by BELAY, the incredible 100% remote organization, revolutionizing productivity with Virtual Assistants, Bookkeepers and Social Media Managers. Accomplish more, juggle less. Modern staffing from BEALY. And now to your hosts.

Tricia Sciortino:

Welcome to the One Next Step, the practical business podcast that helps you run your business so it stops running you. I’m Tricia, and today we’ve invited back our amazing friend, occasional co-host of this podcast and Director of Marketing for BELAY, Amy Appleton, to talk about all things ROI — return on investment — in case you don’t know. We’ve talked about this last time. Amy has been a valued member of the BELAY team for over eight years. She has played an integral role in our business development and marketing strategies, helping us here at BELAY earn seven years in a row on the Inc 5,000 list by contributing to our marketing efforts with her amazing leadership in all things marketing for BELAY. I’m excited to talk to Amy today about the topic that every leader wants to know more about ROI. We’ll talk about what healthy ROI looks like, when to focus on it, when not, and how to respond to negative ROI and lots more in today’s conversation. So let’s get to it. Welcome, Amy.

Amy Appleton:

Thank you. I am so excited to be here.

Tricia Sciortino:

I know. You are our resident ROI expert here at BELAY, and I know you’re gonna have a lot of great information and knowledge to share with everybody on today’s episode. But before we get started, I have a fun icebreaker question for you.

Amy Appleton:

Let’s do it. 

Tricia Sciortino:

I know this answer because I know you, Amy, but for those of you who don’t know Amy. Are you an early bird or a night owl?

Amy Appleton:

I am a notorious early bird, so I was the person who could go out in college and all my other friends would sleep in, and I actually cannot sleep in. I have never been able to sleep in. I am like nine o’clock, I am like up, and today it looks more like six o’clock I am up and I am at ‘em, and then I am worthless probably like four o’clock on.

Tricia Sciortino:

That is me too. I, first of all, I was gonna say 9:00 a.m. is sleeping in for mothers or people over the age of 40, first of all. So 6:00 a.m. sounds more like early bird stuff, but I’m with you. I’m an early bird as well, so God bless the night. I think I might have been one when I was like in my twenties and then something happens, there’s like a conversion timetable or something that happens. Maybe it’s the hitting children mark or something, have kids and then all of a sudden you don’t have a choice but to be a morning person.

Amy Appleton:

Yeah, I think that is it. And but no, I’m still, even my friends, everyone I travel with, they know like, it doesn’t matter. I’m up, I’m up making the coffee. I’m the coffee person. There’s no sleeping in for Amy. I gotta start the day. I gotta kick it off.

Tricia Sciortino:

I’m with you. Feet on the ground, ready to go.

Amy Appleton:

Yes.

Tricia Sciortino:

Speaking of ready to go, let’s get into it. Let’s talk about ROI. I mean, one of the most important things we consider when it comes to marketing and growing a business. So what would you say, what is a healthy marketing ROI look like?

Amy Appleton:

That is a great, great question. So basically healthy marketing ROI is you are not spending more to bring on new business than the new business brings in revenue for you. That is the simplest way to explain it. You do not wanna spend more to go get new customers, clients than you’re gonna make from that business.

Tricia Sciortino:

Off those customers or clients.

Amy Appleton:

Off those customers. And so there are ratios that they talk about from, you know, five to one, meaning if you get a thousand dollars from your client, you don’t wanna spend $200 or more would be like where you would want to spend for that acquisition. But really it just boils down to don’t overspend to gain your clients. And there are, and I think, what happens then is it scales based on where you are in your business. Now, I gave like a really simple answer, but then depending on what your business looks like, you will have different tolerances for what your healthy ROI is gonna be. It is not a one size fits all question at all.

Tricia Sciortino:

Gotcha. So like you mentioned five to one ratio, some organizations could have eight to one or 10 to one or two to one dependent on maybe what the industry or the product or the, the organization is equipped to do.

Amy Appleton:

Exactly. And I mean, ideally you do want to spend as little as possible in order to gain them. So while you know, an industry good might be five to one, if you have areas in your business that are 10 to one 20 to one 50 to one, I mean, those are phenomenal opportunities. And so no one is gonna have one thing, everybody’s gonna have a balance of them. But it really does depend on what your business size is, what your tolerance is. Is it a one time, are you getting one time revenue or is it a recurring? Are you a tool? Are you have a recurring revenue? I mean, you take all those things into consideration to bring in the mix for what is healthy r o roi.

Tricia Sciortino:

Awesome. So what do you need to know if you’re getting good ROI, what are the metrics, let’s say for example, you use from maybe different various marketing efforts that BELAY uses. What are the telling metrics? What’s helping you know if we’re getting good ROI?

Amy Appleton:

Yeah, I mean, the first thing that I wanna know is how much does it cost? How much does something costing for us to do? So that’s the first thing. The second thing I wanna know is, is it a product service? Like what’s the value of that? You do need to know those two pieces of information in order to, to start roi and like they will vary. Again, it’s not just gonna be a one size fits all. If you have a product, you might have multiple products. So you will probably want to know for each individual product or each individual service, you know, what are those numbers for each one of those things. So it’s really just taking opportunity. And that’s doesn’t have to be fancy depending on where you are in your business. You know, if, if you have very simple balance sheets and Excel sheets, you probably have that information already at your fingertips. And as you get more advanced and your technology grows, then all of that information starts to live in technology for you. But I mean, I laugh, I think for the longest time we had it in a spreadsheet and we were just getting the numbers from LZ who was telling us what the numbers were and then we would just put them in Excel sheet and that’s, and that’s how we were finding our information.

Tricia Sciortino:

Yeah. It doesn’t have to be complicated. So for those who are new or maybe don’t know, or this is the first time they’re kind of really considering what ROI looks like, can you explain, or you know, what the evolution has been for what we perceive as value? So we talk about, okay, the spend, you might spend hypothetically, you know, $5,000 on a Google ad and then your hope is what, that you get five, you sell $5,000 worth of services and that’s a no. So can you talk a little bit about what true value is when you’re look when things to consider, when you’re con when you’re looking at ROI and what value really is?

Amy Appleton:

Yeah, so you were gonna look at like, like I said, it’s like what did you spend? You don’t wanna break even. So breakeven is not, you know, that’s not ROI that’s breaking even.

Tricia Sciortino:

That’s just a hamster wheel.

Amy Appleton:

That’s just a hamster reel, right? So you don’t wanna spend $5,000 to get $5,000 back. You just put a lot of effort to net zero. Right? So really the value becomes looking at and you know, I wanna start with, yes. So we do Google ads and that’s an easy one because it’s, it’s trackable. Everything is, that is a technology that is there. We spend a certain amount, Google literally shows us exactly what it is. We can literally find out did we get any clients from that? And we can actually see a direct one-to-one relationship between that spend and then was the spend worth it? Did we gain more new clients with the spend than we spent at that time? And that would be considered great. I think a lot of small businesses start with a word of mouth and referral business. I mean, I know which is free.

Tricia Sciortino:

Which is free. Which is all positive ROI.

Amy Appleton:

Which is the best ROI. So ROI really starts coming into play when you know that you are actively spending money to gain new clients. Like you’re beyond out, you’re going outside of your word of mouth because that is a hundred percent ROI back on word of mouth.

Tricia Sciortino:

Yes. And then when you’re ready to really step into the big leagues, guys, then you’re looking at the value of the profitability of the client you’re attaining not just the revenue that they’re bringing into your organization. So hypothetically, right? You’ve spent $5,000 in Google and you spend, and you get a client for $5,000, but the cost to serve the client is 2,500. So truly your earnings from the client are only 2,500, then you’re actually in a loss situation. So I think if you’re taking it next level, you’re even looking at the value of your client based on after it takes to provide the service to the client.

Amy Appleton:

Yes. And you’re right. So that does take it to the next level when you stop looking at what was just the, say, initial revenue that they brought in. But you really start to break it down into that. The other thing that people can look at is like, what is your tolerance for how long do you want to take to earn the money back that you spent? So that’s another way to look at it in terms of, you know, SaaS companies, sometimes it’s like, ‘Hey, as long as we make our money back and we’re we’re going into profit within 12 months, like that’s good.’ But a lot of other people wouldn’t have the tolerance to wait 12 months in order to make their money back. So they’re actually, and that is an individual business owner decision on what am I looking for? Like, how fast do we want to be able to make our money back?

Amy Appleton:

So now we’re at zero and then move forward. So that is another thing to, to look at and to know like what is your level of tolerance and risk for how long are you willing to wait in order to get the money back based on what you, yeah. What you sell. Is it a tool? Is it services? I mean, how much of your time and other things are involved? So that is, like I said, that is kind of another next level is like how long are you willing to wait to, to make it back and, and what’s that win for you?

Tricia Sciortino:

Yeah. That very good because I think that, you know, there’s probably a lot of people out there that have the assumption that if you spend something in a certain area, you should see leads or revenue generating immediately or within 30 days or whatever that means. But there’s a lot of patience involved with marketing. And sometimes it means you won’t reap the benefit of the reward of the effort and the the dollars being spent. It could be six months before you actually anticipate receiving the ROI back. And I know there’s things here we do at BELAY and you always do a great job at saying, ‘Hey, we’re gonna, we’re gonna you know, maybe sponsor this podcast, but we don’t actually anticipate it there being any return on it for six months’ or whatever that looks like. So I think that’s a great point and takeaway for, for our listeners to know and understand that although we would like everything to be immediate, unfortunately it just isn’t, it’s just not the way it always works in marketing.

Amy Appleton:

No, it’s not. And you bring up a good one — events speaking, I mean, anytime somebody has the opportunity to go and be a speaker at a conference or things like that taking the opportunity to think about what the ROI is in that scenario, and then really planning out how long do you really think it it will take to make it back. And I think we learned from our impatience of when you know that going into it, then you can work towards that amount of time as well knowing that when you go and speak at a conference, what you’re really hoping to do, unless you have books at the back to sell or something to sell at the end of it. What you’re really hoping for in that is word of mouth and for people to know who you are. And it does take time in order for that to filter back to actually see business come back to you.

Tricia Sciortino:

Yeah, that’s a great point. That’s a great point. So for somebody who’s starting to pay attention to ROI, what would you say is the frequency or the time? Like what, what specifically and when are you looking at these types of metrics?

Amy Appleton:

I mean I think you wanna set a cadence where it’s happening on at least a monthly basis. You wanna look at how things are going on a monthly basis. Now, you may go back and things may be happening faster or longer, but a monthly is like a good cadence to go and look at if you’re spending money, how is that money performing? And the really, the reason why is, you know, if, if something is not performing well, you don’t wanna wait six months to figure it out. And something is performing really well, then you want the opportunity to know quickly that it’s working because there may be opportunities to do more, do different. And then same if it’s not working, it might give you the opportunity to adjust quickly. Is this the wrong message? Is the wrong target?

Amy Appleton:

I mean it was the wrong audience. Did we get one thing wrong? Sometimes it could just be one thing wrong. Sometimes it could be it was a complete miss, and then you just want the opportunity to have the data to decide, so what is our next step? And on a monthly basis, I feel like that gives you, because you, like you said, things do take time. Rarely do we see anything that is an immediate — that is a unicorn. We love them and we love it when it happens, but that is not what is always happening. So yeah, monthly basis and that just gives you a nice timeframe in order to make decisions.

Tricia Sciortino:

Yeah. That’s great. So to kind of hit back on what you just talked about about sometimes, sometimes things are negative or maybe you have not, you’re not seeing what you had had hoped out of some marketing effort and something is seemingly trending negatively. What are maybe some of the steps that you would take in that kind of process? Or the thoughts that you would run through if something is not trending to be positively ROI.

Amy Appleton:

Yeah, I hate it when that happens. Darn.

Tricia Sciortino:

No, I know. Oh, I know. We’ve all been there. We always wanna win, win, win no matter what.

Amy Appleton:

I feel the pain even talking about it, but basically what you’re gonna do is look at just a couple of those things just did you do the right thing? Like did you think it was risky? Did you think it was a home run when you were gonna do it? Like, let’s say you thought it was gonna be a home run and you were just shocked that it is not performing well then you can, you just start asking questions. You start looking, you start looking at the data, you start going back, like you start asking why questions, why, why, why, why. Have I done this before and it worked? Did I take in everything into consideration? Did I miss something? I mean, we laugh sometimes. We’re like, does the button work? You know, and I’m sure people relate to this, like, you go and you make sure the button works. Like you’re like, oh my God, is it technically functioning correctly.

Tricia Sciortino:

Oh, we’ve got leads because the button goes to a 404. 

Amy Appleton:

Exactly. Like even starting at this simplest thing. The dreaded 404, but I know I’m not the only person that we’ve ever launched something. And then, you sit and you wait and nothing happens and you really start like testing the buttons to see if like the technology worked. But no, but sometimes because we’ve all either sent it or got it. I mean sometimes there is a human error in there. And then you’re able to catch it. I know that most of the time when we’re looking back through it, we instantly start asking, is it messaging? Did we talk about the wrong thing? The words, it’s the words, is it the creative? Is it we thought something was Im important to these people, but it actually wasn’t. And, and running it all through, through those, those filters, if we have the opportunity and if you do have the opportunity to make adjustments we a hundred percent will make adjustments before we just decide we’re done.

Amy Appleton:

If we really thought it was gonna be a home run, we will go and we will make tweaks to it. Or we will go back to … a lot of the times these things you’re, you’re dealing with another human on the, on the other end who is the sponsor or the person in who’s helping with the paid opportunity. And you can go with them, even Google ads and things and you can change the copy, you can change where it’s going. Even if you’re doing Facebook ads, it’s, it’s all the same. Go and maybe test a couple of things and don’t give up right away, but then also know when it’s just time to be done and just, just say no. Just get to the no quickly just done and and move on and just, and cut your losses.

Tricia Sciortino:

Yeah. Well, and I imagine through that exercise it’s really great to be really, really clear or it can be a reminder of clarity on who your ideal client actually is. Sometimes you slightly targeted to the left or to the right of the ideal client. Maybe it was close enough or it was a move. But I think as a business owner or a marketing leader, I mean just having absolute clarity. I mean we’ve been in business for 10 years and we’re still honing who our ideal client is. They change all the time, so who we served 10 years ago is different than who we served five years ago who is different than who we served today. And so I think like sometimes even what worked last year won’t work today because of the evolution of your clientele. 

Amy Appleton:

That is so true. The most important thing that we’ve learned is you have to know your client. You do. You have to know your customer, you have to know what it is that you bring to that customer that no one else can. And you and you have to know where they are, what makes a difference to them. If you don’t get that piece right, then the ROI gets really hard to make positive.

Tricia Sciortino:

Yeah. You’re not speaking to them, you’re not speaking to them. They’re not hearing.

Amy Appleton:

It doesn’t matter how much money you spend.

Tricia Sciortino:

So I know you talked about how we used to be, oh my god, God bless Google Sheets. And sometimes you just plug numbers into a document and it tells you everything you need to know. But if somebody’s looking for … do you need technology to understand ROI? And if somebody doesn’t have the means because maybe they’re a small business and it’s maybe not an option. Do you have to have technology to really understand ROI?

Amy Appleton:

No. I mean you don’t … You just need a couple of numbers. You just need those numbers that I talked about. You just need to know how much you’re spending. You need to know how much the value of each transaction client, whatever your business model is. You really just need to know those pieces of information. What happens is as your marketing or your business gets more complex, technology just makes it easier. So even for us, what happened was for a long time we could do it on Excel spreadsheets because we didn’t have that many different avenues that we were tracking. But when you get more avenues and more opportunities, and you’re doing more and more, that’s where technology really starts to help. Because you could, it would be possible to track it on an Excel spreadsheet currently, but it would take so much work to do it. And that’s where the technology comes in. But that is literally just I think based on scale of somebody’s business.

Tricia Sciortino:

Right. Yeah. So don’t be discouraged small business owners out there, right? This is something you can easily do for free on a worksheet, on a spreadsheet by getting some financial numbers and spend numbers and using some good old fifth grade math. It’s just easy division. We can make it happen.

Amy Appleton:

They’ll even do that math for you in Excel. If you can figure that, you can Google that. 

Tricia Sciortino:

Even I could do this math.

Amy Appleton:

Simple math.

Tricia Sciortino:

You don’t have to be a CFO to understand ROI. Yeah. You just, it’s just fifth grade math. So it doesn’t have to be overly complicated, but man, yeah. When you have the right tools, when you’re to a point where you need them, the speed with which you can get great intelligence is, is quite rewarding. So thanks for the tip on that one.

Amy Appleton:

And I think what I would say, don’t be scared to do things that you can’t track.

Tricia Sciortino:

Well that was gonna be my question, Amy.

Amy Appleton:

Oh, see. We’ve worked together for a really long time.

Tricia Sciortino:

Oh, Amy, I was gonna ask you the notorious boom boom question about branding versus lead gen. So this is a conversation we have a lot over here at BELAY. And if you have a marketing team or focused on generating revenue, cause you’re a business, there is always this kind of push and a pull pull when it comes to trackable lead generation, the things that you know and can see and easily follow that bring you business versus the things that you know, to use an Amy … that are squishy. That maybe the trail to with which things go is, is invisible potentially. And that could sometimes look like branding. So what are your thoughts on the balance of those two things and how do you feel about, you know, the marriage of them and how you work them both into marketing?

Amy Appleton:

I mean I think, you know, branding is everything that your brand is. It is every client interaction, it is every ad. I mean, it is universal. I think when we talk about branding in this way in this time where you can track so much in your software and on your Excel sheets and there’s so many things like Google ads where you can get so much information. I think when we talk a lot about branding, sometimes it is, it’s the squishy, it is the things that are not gonna be easily tracked anywhere really. And then a lot of times, I mean we think of big things too, like billboards and TV ads and and all that. And if you’re Coca-Cola and Chick-fil-A and you’ve got huge budgets to do that,  I mean that’s awesome. I think, you know, Chick-fil-A is not gonna know that the commercial that I saw for the peppermint milkshake last night during the game, it caused us to go buy it. Like that’s not gonna show up in anybody’s tracking software. But yeah, it doesn’t mean that you shouldn’t do things that are that … I think it goes back again to that tolerance and the, the tolerance that you have to do it. 

Amy Appleton:

It also allows for when you know your customer really well, you can start to track back to things that you actually can, but it doesn’t look the same way that it does as if it was a Google ad. It looks like I heard about you from so-and-so, so-and-so saw you on blah blah blah and that’s how I found you. And, and I think that is where just having good communication with your customers, if you’re gonna do that kind of thing, you’ll have to ask them and you’ll have to ask a lot of questions in order to get to the bottom if you, if you want to be able to have something to track.

Tricia Sciortino:

I think that’s a great, great source of information for those opportunities where, where there’s lack of clarity on where business is coming from is that, you know, for us at BELAY, our sales team asks every single person they talk to where they heard about us, because sometimes they’ll fill out a form on your website that says they wanna talk to you and they might have picked the source as Google when in actuality they heard our name on a podcast or a neighbor recommended them. And so sometimes we go back and edit lead sources because getting absolute clarity is so important to drive where we spend time and attention going forward. So sometimes form fills aren’t always accurate. So we’ve done a great job, our sales team has done a great job at confirming where people are hearing about us, so we know we know the absolute truth. So I think that’s an excellent excellent point. Thank you, Amy.

Amy Appleton:

It’s probably the most important thing that they do. Because I think the other thing when you’re doing ROI is think about your own behavior when you’re buying things. Like think about your own behavior. Like I probably heard about something and then I probably typed it into Google, and then I probably clicked a Google ad for it or I clicked something that was there, but that’s not actually where I heard about it. That’s just where I ended up. 

Tricia Sciortino: 

That was the second step.

Amy Appleton:

It was the second thing. So when you’re tracking ROI on those squishier things, also just use common marketing is so much to just use common sense. Think about your own behaviors and behaviors of your friends and your families and all your coworkers and be aware of how people are buying and how people are making purchasing decisions right now too in terms of knowing that sometimes it’s worth doing them.

Tricia Sciortino:

Yes, absolutely. Absolutely. I think to your point, you know, there’s some tolerance level or you might, when you’re building at a marketing strategy or plan, you might have a certain percent of time, energy or dollars allocated to the untrackable. Knowing what your comfort level is to allocate towards what is trackable, as a CEO of a company, right? I wanna know that there’s a certain amount of marketing effort put towards what is trackable versus the untrackable. So I think that’s great, great, great context. Okay, so here is a really, really, really loaded question that’s gonna be really hard to answer, but I figured the last one I’ll just stump you because this one will be hard.

Amy Appleton:

Let’s do it.

Tricia Sciortino:

This will be good. This’ll be good. Okay, so somebody listening, they’re a small business owner right now and they’ve got maybe a couple bucks in their budgets, and they wanna, they’re gonna put it towards one marketing initiative. What would you say is the best place to put dollars to to get the best ROI, the best bang for their buck If there’s one thing they can go do tomorrow?

Amy Appleton:

Yeah, it’s a stumper, right? And it’s marketing, so it’s all gray. It’s loaded, it’s always gray. I would say, ‘If you like to live in the gray, welcome to marketing.’ Honestly, it goes back to they need to know, I can’t give them the answer because they need to know their client, they need to know their customer. I know it sounds like a broken record, but it’s really the truth. Like they need to know and then they need to know, if I was going to give advice, it would be where are they, they, where are they spending their time? What are they listening to? What podcast are they listening to? Where are they getting their information from? What are they reading? Who else are they listening to know them and, and look for opportunities there to spend the first dollars because they’re already hanging out in those places.

Tricia Sciortino:

Absolutely. That’s an awesome, awesome answer to a very hard question. So thank you. I’m actually gonna add, this is gonna be my last comment. I would actually also add, depending on your business model, if you have energy to focus in on one particular area to increase sales for your business, I would say pay attention to your current client. And so at BELAY we have a very intentional referral program and honestly, sometimes the best clients are partners, peers, and those related to your current clients. Because not only is it a great lead, which is not marketing related, but it’s just business related, a great lead for your organization. But if somebody is recommending it is also already an affirmation. It’s an affirmation and a recommendation and a lead. So typically, for BELAY, we find that that serves us very well. And so even having your marketing team involved in how we serve our clients so well, so they want to be advocates and talk about their services with us and how that organically serves BELAY, and then how we’re able to serve others in their network.

Tricia Sciortino:

So that’s a great effective way that has really ROI to get the word out for your business as well. That’s my little side tidbit for adding clients in marketing. Anyway, thank you, Amy. This conversation has been awesome, filled with so much great information and understanding about what it means to have ROI and what to do if you don’t have it. And how to calculate it without driving yourself crazy. It doesn’t have to be complex. And Amy, because she’s amazing, is actually going to hang around a little bit after this interview to answer one more question for us about how to invest and measure your ROI when investing in your brand. You are not gonna wanna miss it. To hear that clip, subscribe to our email list, and we’ll send you a link to our bonus content or visit onenextsteppodcast.com were you will find a link in our show notes. Thanks, Amy.

Amy Appleton:

Thank you. It’s been awesome.

Tricia Sciortino:

Hey guys, wasn’t Amy a pleasure? She’s been a joy to work with for the last eight years, honestly, and I love having her on the podcast. And, as always, we have a download for you so you can take your one next step. And this week’s download is our marketing ROI Tracker template, which is similar to what we use to monitor, measure, and communicate marketing ROI here at BELAY. It’ll be a great easy tool for you to use if you don’t already have one in place. So to get it, text the phrase one next step to 3-1–9-9-6 or visit onenextsteppodcast.com, and you’ll get access to today’s resource to keep you moving forward. So guys, until next time, own your journey. It’s your life and your business. It’s up to you to create the life and organization you want. Join us next week for more practical tips and actionable tools to advance your business one step at a time. Start by making today count.