How to Measure Your

Marketing ROI 💰

Katie Wight | May 5, 2023

👉 Oftentimes in the early stages of our business, our marketing budget is going to be a much greater percentage of our revenue because we have to spend on brand awareness, audience building, and acquiring customers (while our revenue numbers are still relatively small).

👉  As far as what a “good ROI” is on paid ads, only novices will speak boldly with blanket statements. As founders, we see all the claims of 2 - 10x return on ad spend – with no context about how seasoned the ad account is, the size of the brand’s warm audiences, their price point, the time span it took to generate the return, etc. The only benchmark that actually matters is your total marketing efficiency ratio: the difference between the dollars you spend on growing your business and the amount of growth those dollars deliver.

👉 There are SO many other factors that can affect what marketing benchmarks look like at your particular brand! For example, how fast are you trying to grow? What’s the size and saturation of your market? What’s your price point? Your audience size? Do you have organic traffic (or foot traffic as a retailer)? All of these factors are like the genetic makeup of your brand and your unique benchmarks are the equivalent of your fingerprint.

👉 If we make decisions based on “rules” that lack context, we miss the opportunity to get to know our own numbers (like how much money and effort it takes for us to acquire a customer, what their value is to us over the course of three years, how that ratio fits in with all of the other expenses inside of our business, what that means for our profitability and ultimately, the sustainability of our business model).

👉 As founders and marketing leaders, we don’t need to create every post, but we do need to understand how to lead decision-making with all of this info!