Growing your practice through digital marketing is a wonderful way to build trust with prospects and keep your book full of the right clients. The allure of digital marketing for us analytical types is the ability to track results. While cookies, pixels, Google Analytics, etc. can get you a precise ROI on your marketing, it may not be worth your time and money. Keep it simple with this method of measuring your marketing ROI.
An accountant or bookkeeper doesn’t have to learn or pay someone for precise tracking of the prospect to prove their marketing is getting a return.
Before you start tracking your return on marketing, you first need a marketing plan. This plan typically includes the following:
- market analysis
- target client identified
- messaging
- marketing method selected (e.g., seminars, guest articles, SEO, paid ads, social media, etc.)
- key performance indicators (KPIs) on how your marketing plan is working
These KPIs can be website traffic, prospective client meetings, or attendees at a seminar. At the end of the day, the only thing that matters is the number of clients signed. Everything else is interesting data to understand and improve your sales funnel but it doesn’t get you a return.
For example, let’s say your target clients are private-practice physicians. Your market analysis shows the best way to find and engage with them is guest posts in medical newsletters and paid ads on medical practice management websites. Implement this strategy to see if your ideal client finds you and becomes your client.
Marketing is a long game. Depending on your strategy, it may take a month or two to notice an uptick in engagements and even longer to get meetings scheduled.
Be prepared to track your investment and return over months to get an accurate ROI.
3 Questions to Measure ROI
To keep it simple when calculating your return on investment, answer the three questions below:
- How many new clients did you sign?
- How much did you spend on marketing?
- How much is your customer lifetime value?
Let’s break down these three questions.
1. New Clients
Your marketing plan is live, and you have published a couple of articles. You notice an uptick in your website traffic. Google Analytics tells you people are coming from the medical newsletter you had a guest post published in last week. You start getting a few calls from interested prospects.
With all the power of digital marketing, you can’t be 100 percent sure how the prospect who called found you. The best solution is to ask them.
You can ask during your first informational meeting, but we recommend you focus on getting to know them and how you can serve them. Once the prospect becomes a client and you have a rapport with them, ask them how they found you.
If they say “Google,” then the money spent on improving your website’s SEO is working. They may say their friend recommended you. Word-of-mouth referrals are wonderful, but ask a follow-up question to learn more. For instance, did they call you immediately, or check out your website or sign up for your newsletter for a few months before they called? All this helps you understand where they engaged with your marketing plan.
Track their answers in a spreadsheet.
2. Money Spent
Track how much you’re spending on marketing each month. I have no doubt, as an accountant, you have an automated and well-organized expense report tracking system.
You can bundle your marketing expenses into one line item or break out your expenses based on each marketing method you are implementing. For example, your return on SEO should be the lump sum cost of updating your website’s SEO compared against new clients who found you through Google or another search engine over 6 months to a year.
If you are outsourcing your marketing, request your marketer break out the expenses of each marketing method in their invoice.
Set up the systems to automate your expense tracking so you can test each marketing method.
3. Customer Lifetime Value
The objective is to sign more clients. The value of a client to your firm is the customer lifetime value. This is calculated by the following equation:
The Duration an Average Customer Stays (years) x Dollars per Year They Spend = Customer Lifetime Value
For example, an average client stays with you for 5 years and spends $750 per year. Your customer lifetime value is $3,750.
You can split your clients out by service if there is a large difference based on dollars per year spent, such as a tax return client verse a bookkeeping client. Ensure your marketing strategy and expense reporting system are aligned.
Putting It All Together
Your marketing ROI is the following:
ROI = ((Customer Lifetime Value Number of New Clients) – Cost of Marketing) Cost of Marketing
Figuring out how to measure marketing ROI can get complicated. But it doesn’t need to be. Remember: The more convoluted you make it, the more money or time you will have to spend to track it and understand the results.
Your first marketing plan will most likely not work. Marketing is an iterative process as you learn more about your ideal client and how to speak to them. The important thing is to simply start.
Set up the systems to test your plan. The ultimate goal is new clients signed. Answering these three questions is how you can maximize your investment in marketing.