How to Calculate ROI of Marketing Technology

Learn how to build marketing technology business cases that executives love to approve. Walkthroughs with real step by step examples to build ROI stories.

1. Making the Business Case for Marketing Technologies Josh Hill 2023-2024 jdavidhill.com

2. Josh Hill GTM Operations Executive and Consultant Building GTM Infrastructure for large scale B2B organizations Consulting with companies ready to scale up GTM motions Building ABM the right way 20+ Years of experience in Sales, Marketing, and Technology running some of the largest MOPS teams worldwide. Find me

3. Do you need it? Prove it.

4. Your goal today Build a business case that gets fast approval from IT, Finance, and Executives. Learn exact steps and math to use. Use the ROI Stack Method to Win

5. What is a business case?

6. Save time A new process or tool that clearly reduces the time to run a process or achieve a goal has a monetary equivalent. >>People Hours or Processing Time or Usage, etc Save money Reduce usage, licenses, eliminate something Save people Always translate time and money saved into People Time-Money. Your FTE is worth $X/ hr x # of Tasks per Day….

7. The ideal business case shows a project will generate profit through reduction of costs and/or facilitating growth Audience Stakeholders, Project Team, Directors, Your Manager Stakeholders, Project Team, Directors, Your Manager VP+, Execs, Approval Committees What Why is this a pain and what it will cost us if we do nothing Proposal and why this will work; why it was chosen Bottom line Growth+Savings in a Chart or Table Backup slides Analysts, Detail people Slide Count 3 3 1 52 3 Slides

8. How to consider the problem to ROI is not the same way to present it to Finance or VPs

9. The Executive Slide Order is ROI First

10. How to manage your internal process Audience Stakeholders Executives Vendor Procurement Committee Financial Analyst Slides 1 3 3 52 52

11. Example problem statements We have 5 SEO tools that are built for SMBs. We are now an Enterprise. The tools cost too much, don’t do what we need, and require 10 FTE to manage SEO Current cost is $X Continuing down this path means $Y + $Labor Will miss our targets due to lack of SEO visibility

12. The solution to a business request Business requested a goal of $ABC Migrate to 3 tools that are Enterprise grade The tools cost less than current 5 tools We will need only 5 FTE to manage SEO thanks to improved reporting and automation Take the savings and do something.

13. ROI overview SEO Optimization Today Tomorrow Software $348,000 $156,500 Labor $ $1,000,000 $500,000 TCO $1,348,000 $656,500 Net Savings $691,500 ROI 105% Traffic 75% of Target 120% of Target Traffic Est Rev$ $750k $1.2M Total ROI: Savings+Growth Approve PO 12345 by July 31 Launch Date: Sept 1

14. The ROI Backup Can you spot the issue?

15. The Three Types of ROI

16. Costs in the future will be lower Current run rate is greater than the future run rate. Ideal for automation or optimized processes. Assumed future outcome New martech which will reduce funnel friction Other project to streamline funnel Upfront investment & future impact Best for Large Projects with an upfront cost to build and a long-term net benefit over quarters or years. Do nothing= $2M/ yr Take action=$1M/ yr +10% lift in pipeline +20% increase in demos Year 1=$1M invest Y ear 2= $1.5M profit Year 3=$2.5M profit The Three Types of ROI

17. Automation gains Which teams or people get hours back? Include every single team and translate Hours * $/ Hr A ssumed future gains Assume X% improvement in revenue or pipe R educed software costs Reduced license costs from switching vendors or lower usage, etc. The ROI Stack – Add it all up!

18. Examples

19. Save Money: A to B Goal: reduce costs, TCO Challenge: maintain functions Solution: switch vendors which lowers FTE with better software ROI: 36%

20. Save Money: How much is your time worth? Basic FTE Capacity Process A Hours/Day 8 7.5 Hours/ Wk 40 37.5 Hours/Q 500 468.75 Hours/A 1920 1875 Cost per Hour $ 52.08 FTE Salary $ 100,000.00 FTE Fully Loaded $ 120,000.00 Cost of Process $ 390.63 Hours/Wk $ 1,953.13 Hours/Q $ 24,414.06 Hours/A $ 97,656.25 Things to know Fully loaded FTE cost Cost per Hour of someone’s time Do you need to do multiple types of people? Extrapolate or estimate the time someone puts into a process. Hours Worked * Cost/ Hr = Cost of Process Rules of Thumb: 40 hours/week 480 hrs / qtr 1920 hrs / yr

21. Email reply tool savings Email Replies Today Future Savings Hours/Day 1 0.25 0.75 Reps 20 20 Hours Wasted/Day 20 5 15 Hours/Wk 100 25 75 Hours/Q 1250 312.5 937.5 Hours/A 5000 1250 3750 Wtd Cost per Hour $35 Spent and Saved $175,000 $43,750 $131,250 Cost of Automation 32,500 Net Savings $98,750 ROI 75%

22. Growth Story: funnel math ROI Goal: increase Meetings with Sales to generate $100k in revenue per quarter Solution: use Click to Calendar Service to reduce friction in meeting setting from website and email Cost: $20,000 ROI: 25% Calendar Tool Math Current Future Expected Revenue per Meeting $1000 $1000 Meeting Booking Rate 20% 25% Meeting Attempts 500 500 Meeting Count 100 125 Expected Revenue $ 100,000 $ 125,000 Total Gain   $ 25,000 Cost of Tool $20,000 Net Gain $ 5,000 ROI   25%

23. Process A vs B – an upfront investment Process A (Today) Year 1 Year 2 Year 3 Goal $ 100,000 $ 200,000 $ 300,000 Cost to Reach Goal A $ 15,000 $ 50,000 $ 125,000 Profit $ 85,000 $ 150,000 $ 175,000 % Profit A 85% 75% 58% Process B Cost to Reach Goal B $ 22,500 $ 15,000 $ 10,000 Profit $ 77,500 $ 185,000 $ 290,000 % Profit B 78% 93% 97% Cost Diff $ 7,500 $ (35,000) $ (115,000)

24. Process change ROI over time Goal: 4x revenue by Year 3 Challenge: manual process is unprofitable Solution: automate process to repurpose FTE Profit by Year 3: 97%

25. Further analytical tools to consider Super large organizations may have finance heavy approaches. Ask for help. Does your growth story match up with the rest of the company’s forecasts? Internal Rate of Return (IRR) could be needed by very large orgs but most of us don’t require it. CAGR can be part of a growth story analysis Cost of Capital – again discuss this with Finance. More important for long term investments that could be considered a Capital Expenditure (capex) Examples