Most SaaS and e-commerce either don’t know how to measure ROI on their content marketing or do it incorrectly. Let me give you my 4 steps to measure ROI on content and share my ROI calculator - a spreadsheet template you can copy and use yourself.
In my experience, when executives ask ROI questions, what they want to know is -
1) How many leads & sales they will generate from content?
2) How long will it take to break even? & how much to spend before break even?
Answering the first question is about understanding the total number of keywords in your space that have business value.
Answering the second question —is the process I am going to describe below.
Step 1: Define some concrete metric to measure
Most of us measure vanity metrics. For instance, website traffic, email newsletter signups, webinar signups, social media likes, etc.
These metrics are great but how do you attribute them directly to sales? You can only make assumptions. Producing content that generates a lot of traffic but very few leads is very easy.
So instead, we should be measuring -
Free trial and signups
Purchases in eCommerce & d2c businesses.
Step 2: Set Up Google Analytics to Measure That Metric
Use one of the above-discussed business metrics as a benchmark for content performance.
To measure it, I use Google Analytics (GA). Create a Destination goal: You create a unique “Thank You” page for people who sign up, submit a form, & have that be a goal in GA.
Step 3: Determine the number of Leads/Sales/Revenue per month required to break even.
You need three numbers to calculate this :
Annual ticket size
Lead to close rate
Cost of content marketing
Multiply the first two numbers to get the "average money a lead brings in".
Now divide content marketing cost by "average money a lead brings in" to determine how many leads you need to break even monthly. Further, you can also estimate traffic to break even based on conversion%.
Example - your annual ticket size is $10k & your closing is 5%. So a lead, on average, brings in $500. Now let's say your content marketing cost is $4k. That means you only need 8 leads a month to break even. With 0.5% conversion on your blog traffic, you need 1600 visitors a month. (high conversions only possible on bottom-of-funnel articles)
If you are an eCommerce or d2c business, you just use average order value (AOV)—the average dollar amount of purchase on your site & divide that by your content marketing cost.
So, if your AOV is $400, & your content marketing cost is $4k per month, you would need 10 sales to break even.
With this in hand, executives and founders can calculate their ROI in a jiffy.
Here is the link to google sheets to calculate ROI yourself - https://docs.google.com/spreadsheets/d/14DofXhXoYbMnjT5QQWBJq07KPOByPd8d32D2A1fbLvQ/edit?usp=sharing