Marketers face enough problems as it is — generating traffic, identity resolution, remembering what CTR, PPC, TVA, and DNS all stand for. (Is one of those things not a marketing term and instead from the hit Disney+ show Loki? Maybe).
One of the most prominent challenges marketers face is justifying investments in new technology. That shouldn’t be the case, given that tech typically makes up 22% of a company’s marketing budget.
If you know that a specific tool will elevate your marketing, you must communicate it by building a bulletproof business case. By the end of this guide, you’ll know exactly how to do just that.
Building A Successful Business Case
A strong business case will have the following qualities:
- You’ll have quantified the tool’s contributions. This is something many marketing professionals struggle to do. Enterprise marketing technology rarely works in a vacuum — it needs to integrate with all the other tools in the current martech stack. If you want to make a case for your dream tool, you’ll need to understand the interdependencies between your software.
- You’ll have accounted for all costs and benefits. Marketing technology tools have different impacts on the business’ finances. Benefits could be top-line metrics (like increased revenue) or implicit savings (like boosted efficiency). Costs can be upfront payments or long-term subscriptions. A successful business case can anticipate all of these.
- You’ll need to have adjusted for future risks and opportunities. The costs you face upfront aren’t the only ones you’ll encounter. In the short term, you can face risks like implementation delays, competitor adaptation, and hidden expenses. Long-term, you may see benefits like improved product synergy and an easier time adding other tools to your martech stack.
Let’s build out an ROI model based on Forrester’s Total Economic Impact framework for tackling each of these pillars.
Modeling Your Projected Martech Return on Investment (ROI)
Quantifying the contributions
As you model out your anticipated ROI, you need to account for the nuanced ways martech can impact top and bottom lines. Before we even think about sales and leads, we must focus on how tech tools move your marketing efforts.
The easiest way to start is by thinking about productivity enhancement savings. This is money that the software saves you by making work easier. A great way to measure these gains is through the difference in workflow speed and collaborative projects. Say a new tool is supposed to reduce the needed time for a multi-channel campaign launch by 30%. You can factor those savings into the benefits of your marketing ROI.
Next, you should factor in cost reductions. These can come from anywhere, but often it’s from consolidating the services you pay for into one suite. If most of your business tools come from Adobe already, and you start using the Adobe Real-time CDP, you’ll probably get a better deal and see lower maintenance fees.
It’s also important to remember that savings don’t happen all at once. In your marketing ROI analysis, factor in the time it takes for benefits to materialize. You can start with a baseline of one year but modify it according to your needs. If you’re interested in a new content marketing platform, for example, consider how long it will take your team to learn the new tool.
Let’s recap:
- Quantify productivity enhancements by measuring time saved and improved group efforts.
- Measure cost reductions as they appear through product synergy and vendor consolidation.
- Factor in the amount of time it will take for the benefits to appear.
Accounting for costs and benefits
Now let’s get into the meat of the marketing ROI analysis: costs and benefits. These may seem obvious, but here are a few things to remember during your calculations.
If you’re tracking B2C engagement, make sure to include incremental sales powered by the marketing technology. Sales can come from anywhere: cross-selling, improved campaign targeting, and better responsiveness are just a few examples. (For B2B firms, track incremental leads instead!)
Also, remember to project performance improvements from your overall tech stack. Your strategy isn’t built in a vacuum — you’re probably using dozens of other tools to refine and execute your marketing efforts. As you model your marketing ROI, account for the whole, not just the parts.
Costs are generally either one-time incursions or recurring fees. One-time costs typically appear when you first implement the tool. They can include:
- Hardware fees
- Cloud infrastructure set-up
- Licenses
- Integration services
But not all costs are this apparent. Don’t forget to include the price of vendor research, education, and delivering the updated experience to your audience. Recurring costs take many forms as well. The largest will likely be a software subscription, but also factor in maintenance and infrastructure fees.
Let’s recap (once again):
- Track incremental sales for B2C channels and leads for B2B ones.
- Look at your marketing technology stack holistically when you quantify improvements.
- One-time and recurring costs can take many forms.
Adjusting for future risks and benefits
Ever heard of Murphy’s Law? It’s the idea that anything that can go wrong will go wrong. We’ll be honest — not a great view on life. But in a marketing technology business case? Accounting for unexpected costs will make your marketing ROI report that much more compelling.
The most common problem you’ll face is delays. Whether it’s because of a time crunch, resource deficiency, or simple technical difficulties, these delays can seriously cut into your return on investment.
You’ll also want to account for how your competitors will respond. If the tool you’re proposing is popular, other firms in your industry will likely adopt it soon. This could end up reducing your projected benefits by more than you think.
Unforeseen expenses are another risk to keep in mind as you build your marketing ROI projection. Ideally, you can work with other professionals on your finance and technology team to anticipate costs like middleware purchases, integration, and beyond.
But life isn’t all risk! It’s a good idea to measure out the future opportunities this investment can bring. Maybe you’re looking at a new marketing automation tool — since it’s part of a suite, adding other tools from the same marketing cloud will be less time-consuming and costly in the future.
Let’s recap:
- Factor in the cost of delays.
- Anticipate the effect of competitor adaptation.
- Plan for the cost of unforeseen expenses.
- Predict the benefits this investment could provide in the future.
What to Do After You Make Your Case
So, you’ve made your case. The crowd is cheering, the critics love it, and you’ll get your trophy in the mail. What now?
Iterate.
Your model isn’t a static tool — it’s dynamic. Track how it performs against real life, and make adjustments where you need to. Ask yourself these questions as you assess its performance:
- Are the benefits showing up constantly? Or seasonally?
- Does the ramp period need to be extended or shortened?
- Have the risk factors mitigated themselves sooner than expected?
Your marketing efforts, like your model, are works in progress. But with the tools and tips we’ve outlined here, you’ve got the proper foundation to justify your projected marketing ROI.
Want to make sure you’re making the right call for your martech stack? Portage Labs can help — contact us today! For more industry insights, check out the rest of our blog.
Frequently Asked Questions
What is an acceptable ROI for marketing?
Different organizations operate by their own metrics. But a commonly accepted rule is that return on investment (ROI) should be at a 5:1 ratio. If you’re aiming for industry-defining excellence, a 10:1 ratio should be your goal.
That said, all businesses have unique cost structures, and some benefits of marketing are impossible to quantify. If your brand prioritizes lifetime value over conversion rates, you might need a different measurement.
How can I improve my ROI in digital marketing?
Your digital marketing ROI depends on several factors, but there are a few ways you can improve it. Overall, you should focus on developing a data-driven marketing strategy. From a content marketing perspective, prioritize the material your audience wants. Steer your marketing efforts away from vanity metrics. Use marketing automation tools to their full advantage. Every decision you make should be backed by decisive evidence.
How do you demonstrate marketing ROI?
To demonstrate your marketing ROI, you first need concrete campaign goals to measure against. You can set these via channel (social media interactions, email opens, eCommerce site) or medium (content marketing, email marketing, etc.). Make sure your goals are measurable by using marketing stats like CTRs, open rates, and conversions.
