Calculating True B-to-B ROI
To summarize campaign effectiveness, marketers need some kind of conclusive metric, such as return on investment. But in B-to-B, when a campaign’s revenue often is sizable compared with its expenses, ROI is problematic.
Consider this example: $30,000 was spent on an effort that eventually generated $3.6 million in sales. The ROI comes out to a ridiculous number—11,900%. This apparent windfall shows that the marketing outlay is just a fraction of the total cost of sales.
To understand a program’s true ROI, management needs to take into account the cost of both sales and marketing. For the marketing side alone, the expense-to-revenue ratio (E:R) proves to be a much more useful number, allowing campaigns to be evaluated against each other and to serve as a benchmark over time.—Ruth P. Stevens
