Newly minted entrepreneurs are eager to demonstrate progress in their business in order to validate their efforts. Investors, partners, clients and employees are all watching carefully to see how the new firm's efforts pay off. Marketing is one of the biggest expenses of any business, especially new ones. To show progress, entrepreneurs need to illustrate the business impact of marketing spending.  There are several ways to measure this impact.

Tying conversions to leads

The first thing to measure is tying leads to conversions, and conversions to sales. Increased leads coming into the company should equate to greater revenue. Obviously, if your revenue is increasing in line with increased marketing spending you can make a clear case that it is having an effect. 

Implementing inbound marketing

There are a few different ways to increase lead generation, but our favorite way to get high quality leads that buy is through inbound marketing. Inbound marketing involves creating niche content that is highly attractive to your target customers and buyer personas.

For example, if you are a SaaS company selling inventory management tools to restaurants, you need to write and create articles, blogs, podcasts and videos about successfully increasing cash flow at restaurants through careful food ordering and resource planning. People browsing the web who are interested in this content are likely to want to provide their contact information in exchange for access to this material. When sales people follow-up with them, inbound leads are more likely to convert to sales.

In general, inbound marketing produces the best leads because the consumer is motivated to find your content and may arrive there without any paid advertising.  The return on this investment is the cost of the content divided by the profitability of the sale.

Paid search

Companies can also use paid search such as Google Adwords. Paid search has a very clear cost per click rate. While some clicks immediately leave the page, others stay and convert to sales. Companies can easily optimize this marketing spending by putting more resources on the key words that convert to more and higher sales. As more money is placed on the effective key words, the return on investment improves. Again, return on investment is calculated by dividing the paid search cost by the income on the sales.

Affiliate marketing

Affiliate marketing is another key way market your product. This method targets businesses and websites that can access your target customer base. They conduct all of the outreach, and you cut them a percentage of sales in exchange for clients. The commission can range from 5% for sophisticated products to 40% for very high margin products.

An example of a market that can benefit from this is a SaaS company providing financial trading software for brokers. They can work with financial websites and intermediaries to spread the word about their product. When sales come in, the affiliate source gets a cut. The return on investment is equal to the commission divided by the sale.

Measurement of ROI

Companies can now use cookies to measure the source of leads very specifically. When they arrive at your website you know exactly where the user came from. If they convert to a sale, you know how much you spent to acquire that lead. 

• Did the lead come from Google Adwords, or another paid service?  
• Did it come in through a link from another site which might be free?
• Did it come through affiliate marketing?

What are you doing to illustrate the impact of your marketing efforts as a first-time entrepreneur? Share your strategies in the comments below! Do you need help marketing your startup? Contact Milwaukee marketing agency for startups, Accelity Marketing.