Stop Asking Marketing for ROI (Until You Define Success)

Speaker A: And the inability of marketing to understand what those numbers are and what they mean. Use AI. Like if you don't have good numbers, look at benchmarks. Type into any AI tool that you're using. Like, here is our solution, here's how much it costs. Here's what we've done historically.

Speaker B: Welcome, um, back Justin. We've got another episode of Tech Qualified and today we're going to talk about ROI and measuring ROI for marketing. This is something that you hear a lot in sales calls. I hear a lot about this just working with clients and it's something we definitely get a lot of questions about. But to you, what does ROI mean when it comes to marketing?

Speaker A: Yeah, it's interesting. I wrote a post the other day about table stakes marketing. I think there's two different sides to the ROI of marketing. So I think part of it is you have to do marketing. You have to spend money on marketing as a business. I think that there is no now disclaimer. I'm going to talk about the ROI of growth marketing and how you do need to be able to attribute things and have success metrics and what have you. However, I'm starting at the very front of this question, which is there is a common thing I see across organizations that is, you know, a cfo, a CEO, whomever, a board, and they want every single marketing dollar to be attributed to success metrics. And I think that that is a fallacy to me. There is, you know, there is no difference between marketing as a business function than there is of uh, hr, than of accounting, uh, than there is of counsel, uh, or attorney. And you don't go to your HR person and say, what's your roi? Sorry, you need HR as a business, you need marketing as a business. You need somebody who runs your website. You probably need to have, you know, be posting on social. You need to have some sort of blog or way to say that you're alive as a business. And for some reason because marketing is called marketing when really it like should be called like that piece of it should be called like keeping your business alive. Which I know this is not a live copywriting segment, so we're not going to call it that. But at the end of the day, so we call it table stakes marketing. And there is no ROI to table stakes marketing. You have to do those things because you elected and when I say you, I'm speaking to business owner, CEO, whoever it may be, who is the top person in charge. You decided to run a business and part of running your business is having some Sort of table stakes marketing running. So there is no roi. Do not ask. What is the ROI of you managing and hosting my website? Now there could be, you know, maybe work on some, you know, conversions and messaging for the website. I'm not saying that there can't be, but I'm saying you need to have as a business owner that whatever percentage you decide of your annual revenue is going to be put into marketing and flushed down the toilet. Now, if it's done well, maybe it returns something. But that, uh, every dollar in marketing is not going to equate to $2, because then people would just put every single dollar that they have in throw marketing efforts. There is a layer of we have to do this because we decided to be a business. Just like you have to do hr, you know, just like you have to do the other thing. You have to do your accounting, you have to file your taxes. There is no ROI to that. Although maybe there could be a few, you know, whatever. But you see what I'm saying. So I, you know, uh, that's where I want to start. I'll let you ask another question, Bailey, and then we'll go from there.

Speaker B: Well, I think you, you make a good point. There might not be a direct ROI for everything. There are attribution models, really expensive ones that you could probably use to figure some of that stuff out. But it is table stakes and it's just the price to create trust with people.

Speaker A: Yeah. Cost of doing business. I, uh, mean, like, you have to do these things. I don't know. Like, I. Bailey works on a lot of our internal marketing efforts. I don't go to her and say, what's the ROI of? And I, I'll, I take it a layer, uh, a step further because I believe in this stuff. I don't ask. We're doing this step, this show, tech qualified. I don't go and ask her, what is the ROI of this show. It's important. We use it for a variety of things and we use it to keep our blog updated, to keep content flowing, to keep social media rolling. For me, that's an investment I'm making in the business. I don't go and look, uh, not saying that you can't, but I'm saying that I don't. And that's probably a layer further than, you know, having an updated website and, you know, making sure that you look like a company that is in 2026.

Speaker B: Yeah. So obviously there's things that are table stakes marketing, but there are other things that probably have a, uh, direct roi. And this I think definitely ties into figuring out what the goals of an organization are. And I know you have a lot of conversations with companies and you ask, hey, what are your goals this year? And what are some of like the most common things you hear from people?

Speaker A: Yeah, so, so roi, when it comes to growth, marketing and wanting to grow the grow your business is definitely a thing. And so, you know, I think that there are ways to calculate roi. It's funny, I do have people who come to me and they say they just want more and then I go the other direction. So the beginning of this recording, I'm talking about how, you know, there are things that are table stakes, but then on the other side, I actually, when I'm asked to provide true ROI to a company based on their desire to grow as an organization, I need that to be very defined. And so I go the other direction, which is when people come and they're like, hey, you know, we want to increase, they may stop there, like, we want more, we want to grow. I'm like, okay, what does that mean? You know, how can we prove that we're going to do that and to be successful? And then I get blank stares. Uh, I actually wrote on LinkedIn today about how in 15 minutes I had a call yesterday, 15 minutes, somebody wanted to know, like, so what are you going to do? And I'm like, okay, you know, what's your cost per lead or you know, what sort of metrics do you have historically that I can take a look at? And they're like, well, we're not really sure. That's why we're coming, coming to you as the expert. And I'm like, how without this data would I be able to calculate what the ROI of an engagement would be? Because the reality is the majority of our clients, at least the companies that we work with, small scrappy B2B tech companies, typically not selling like SaaS, like for $40 a month. These are five or six figure annual contracts that they sell many times six to 18 months sales cycle. So ROI can't be attributed, uh, to revenue, it could be attributed to pipeline, leads, opportunities, etc. So what I try to do when we're calculating ROI is really to dig into financial models of okay, if you spend X, then Y will be the result. And if, if, yes, is that the ROI that you're looking for? So I can give an example. So we had somebody who came to us and they wanted to increase their opportunity, their qualified opportunities by 4x. They wanted to go from one marketing generated qualified opportunity per month to four. And what we calculated was that there was $5,000 roughly. This is a six figure solution. It's an enterprise solution. It's $5,000 roughly per opportunity, qualified opportunity. And they wanted to go 4x, but then they wanted to only spend $10,000 a month additional in marketing. And so this is where you get into that. More more gets people fired. So if you sign up for more and you don't know what more means, you are putting your livelihood at risk. For me, I'm putting my agency at a high likelihood of being fired. For my client, who many times is the internal marketer, I'm putting them at risk of getting fired. Because what agencies will do is throw agency out. The way what agencies and internal marketers, just marketers in general will do is they will be given goals from a leadership group and they will say, these are many times hardworking, honest, good people. And they'll say, yeah, sure, they don't have the ability in many cases to actually calculate this stuff on their own. And they're like, I'm a hard worker. I was given goals by people. And this is a lot of times, like the humility of the people who are in marketing that I work with. They're like, you know, the. My superiors, these like board members, CEOs, like, they know what they're doing. They built this business. So if they give me this goal, it should be achievable. The reality is, in many cases it's not. They do this like, shoot for, for the stars, land on the moon type situation where they say, we want you to 4x our opportunities. We're willing to give you $10,000 a month in marketing spend and hello, puppy. Um, we do everybody. This stuff is tough. Bailey and I create content from our houses. Super important for your business. So, you know, got dogs running around. You probably hear mine before the end of this recording. So what I was saying was, you know, there's this mentality by these leadership groups in many cases that they'll say, you know, uh, shoot for the stars, land on the moon. That's a good situation for us. They're being selfish. They're like, I'm going to make my marketing manager, my marketing director, whomever work super hard to try and hit these goals that are unachievable. But if they do okay, then that's good for us. So let's go back to my equation. So my equation is for X, you get Y. And in this situation, it was $5,000 per qualified opportunity. We wanted to 4x that number, therefore, the marketing spend should be $20,000 a month. Now, there is, you know, kind of a snowball effect in marketing where let's say, okay, well, we're going to actually decrease the. Because we're getting money put into marketing, we're actually going to decrease the amount that a qualified opportunity costs. And maybe we go down to 3,500 or 4,000, well, still $10,000. So what you're saying here is you want to reduce the cost of a qualified opportunity by 50%. You want to go basically from 5000 to 2500 while 4xing results. Those things that me, in my conscience, I can't sign up for. I know a lot of my competitors will. They'll. They'll say they want the retainer. They'll say, we'll do our best. And the marketing person will say to the board, we'll do our best. And everybody's doing their best. The internal marketing person is trying to make their board happy. They're like, I'm going to work super hard. This board, if they gave me these numbers, they, they must be realistic in some way. I'm going to work really hard. They're giving me some agency budget, they're giving me some paid budget. I'm going to go work my ass off. And so let's say over the course of a year that that person generates three qualified opportunities per month on a $10,000 budget. They have 150% did their goals and they failed, according to the board. So if the business had a, uh, down year, let's say that that number is, you know, they have their big sales led organization. So that number for marketing really is a small piece of the pie compared to the 10 sales reps that they have who are all generating outbound opportunities, going to events, what have you. And so let's say that the sales reps all had a down year and that business got hurt. And so they look at the, they look at the numbers across the board. Let's say that the person who thought, well, we're going to aim for the stars, land on the moon, let's say they're no longer with the company, and so now we're just looking at everybody's goals. And we say, okay, this Salesperson was at 80% of their goal. This salesperson was at 85% of their goal. This guy was at 92% of his goal. Oh, marketing only. So they got three of four. They're actually only at 75% of their goal. Yeah, maybe we need to Move on from this marketer. Reality is that marketer was the strongest player on that team who was given goals that were not possible because the financial model of it does not make sense. That marketer did not push back. The agency took the retainer because they wanted to take it. And that is how you fail on the ROI of marketing. So the ROI needs, you need to figure out what are we putting in, what is the historical data, what are we putting in, what can the expectations be? And then what do we think realistically that we can beat it by? And I just see that that doesn't happen very often. And that's what happens when you hear more and m. More can really turn into a lot of really unfortunate things for people in marketing when sometimes they do a great job. And I just think that unfortunately that data side to it is not embedded in every marketer's brain. You have a lot of people in marketing who come from creative backgrounds who are not as business savvy as, you know, the, the, you know, somebody who, you know, went, got uh, you know, their accounting degree or finance degree. And having those conversations is incredibly challenging. It takes the ability to dissect historical data, understand cost per lead, cost per opportunity, how to generate pipeline, etc. And then to put real figures on it. And that to me is how you generate, how you allocate what ROI means in marketing.

Speaker B: Yeah, um, I think you're going into a bit of like creating a marketing scorecard and just setting realistic goals. So that's like a good example of what not to do is just to blindly accept maybe what you're being told your goal should be. So in a better or perfect situation, how would you recommend going about setting more realistic goals?

Speaker A: Well, we go back to the situation. So I mean, this exact scenario, the marketing. So we did not sign up for that. And we're working with the marketing person to go to their board and say these goals are not realistic. And I need goals that are realistic and that are based in any sort of historical context because I'm being set up to fail. And so you need to set what, you need to figure out what it is that you can track, what it is that you have historical data for, and you need to write it down. And you need to say, if I do this based on this information, will you consider that a success? And if the answer is no, then you need to understand why and where is it coming from? Because I just, I, uh, mean we had, we had a client who was paying $6,000 a month and you know, we had to go in a different direction because they said, for $6,000 a month, we want to see hockey stick growth as a company. We want to go from 2 million to 4 1/2 million. And I'm like, we can just say numbers. Like, anybody can just say numbers. And I see it. And the inability of marketing to understand what those numbers are and what they mean. Use AI. Like, if you don't have good numbers, look at benchmarks. Type into any AI tool that you're using. Like, here is our solution. Here's how much it costs. Here's what we've done historically. What do you think is a realistic number that that should be attributed to marketing based on this? And they ask you, like, what are your cogs? Like, how many people are in marketing? What do you estimate that their salaries are? Like, come up with numbers that are based in reality, because you're going to be given numbers that aren't. And it's almost like we're giving. So that company was like, very private equity based. Like VC, not private equity. Excuse me, VC based. And like, like, VCs just say, like, just grow. You got to grow. Hockey stick growth. Hockey stick growth. It's like marketing can't do that. M marketing. If it could, Bailey and I would be billionaires. Like, if we could just say, pay me $6,000 a month. We had no paid spend, just $6,000 a month to make. To create stuff, social media, send some emails. Think I'm going to 125% growth your company next year with $6,000. You were not living in reality. And unfortunately, when it comes to roi, what I see from a lot of people who come to us, I don't want to say that they're not based in reality. They don't know what reality even is. And you need to be you. You need to. One is you need to create goals. Because, Bailey, you know this. The number one thing I'm terrified of, of any client of ours that doesn't have goals is that they're gonna leave because you can't even justify your existence. So you need to create goals, number one. And then number two, those goals need to be based in data. And if you don't have the ability to do that, first off, reach out to us. Like, I'll do. I'll help somebody. Just if you want to talk on LinkedIn, I'll give you some advice on how to, like, come up with some of your marketing goals. But, like, I'm not even saying, like, come work with us if you want to. That's great. But you need to come up with goals, and then they need to be based in true historical data, in benchmark data, in something that you actually feel like you'll be able to do versus just accept either accepting no goals. Just, hey, Bailey, just go out there and just work hard, and we'll see where it all lands. Great recipe for being fired as an agency, as an internal marketer, or not even, like, just let go. Uh, we're gonna go in a different direction with our marketing. I think you're doing a good job, but, like, we're not really seeing results, and nobody. Nobody even knows what that means. And so I think create goals and then just. You have to make sure that they're based in reality and that you have the ability to track them.

Speaker B: Yeah, I 100% agree with that. And there have been instances where some clients we work with don't. They don't have historical data or they're a startup. So sometimes we have to spend a quarter of two just figuring out what a baseline is. We got to get some data, figure out how things are doing, and then from there, we do set goals that are based in reality, and we can be more ambitious with that. But you can't just throw a number out there unless you have some information to back it up.

Speaker A: And you can use some AI tools to say, hey, like, our. Here's our space, here's our average sale price. Here's how many leads we're hoping to get. Does this seem m. Realistic? Like, you can. Even if you have nothing, you can start with, like, I'm not saying put this on, like, a. An official scorecard, but you can at least know, like, what am I trending towards? Like, how. What should I be looking at for what a reasonable number out of gates is? And you kind of benchmark yourself to that. Okay, second quarter. Benchmark myself to that. Okay, now third quarter, we have, like, kind of what I was hoping we would get, what we actually got. Maybe you beat it, maybe you got close, and then you can come up with your numbers from there. So I think my biggest thing with ROI is just trying to build some sort of financial model, some sort of thing that makes sense that you actually think you can achieve and that you get leadership to sign off on.

Speaker B: Yeah. Amazing. Well, I know we're getting close to time, but is there anything else you wanted to add? Any final thoughts about measuring, uh, ROI or setting goals?

Speaker A: I think the only thing that I would add is just that even though I started this conversation, um, saying that roi. There isn't always roi. I think that you should lean into the ROI conversation, but I think that there's just like a line in the sand where you go from table stakes marketing, which is the things that your business needs to be doing, to trying to grow. And then when you start putting more money in and you want to use marketing as a growth channel, actually think you, you as a marketer in today's landscape. Like, I just, I just see a lot of people who push against it, who say, you know, attribution is hard and just trust marketing. You can feel it. I mean, uh, that's just not going to go very far, unfortunately. I wish it was that I do that as a business owner. That's my choice. The reality is the world likely won't do that. And so you do need to give yourself numbers and metrics and that was how you will stay relevant and viable as, you know, a business person. And, you know, so I would say

Speaker B: lean into that, yeah, 100%. Thank you so much for hopping on to chat about this and looking forward to our next chat.

Speaker A: All right, thanks, Bailey.

Speaker B: See ya.

Speaker A: Thanks for checking out Tech Qualified. This show is brought to you by New North, a, uh, marketing agency that helps turn your small, scrappy marketing team into a growth engine. To find out more about New north or check out more episodes of this show, go to newnorth.com techqualified.