It’s a fact of life for marketers: they always have to show their contribution to revenue and prove their return on investment (ROI) in order to gain (and keep) a seat at the table.
But what happens when you hire a growth marketing agency, and it’s up to you to prove to executives that hiring an agency is a good investment? How can CMOs who hire a marketing agency show clear ROI?
It all comes down to key performance indicators (KPIs). If a marketing agency and their clients set the right KPIs from day one, they can ensure that they are reporting on the metrics that actually matter.
Keep reading to find out what you can do to promote a profitable partnership with an agency and what you should expect from an agency when it comes to ROI and KPIs.
Setting the Right KPIs
Before hiring a growth marketing agency, it’s a good idea to start formulating your own KPIs. Although an experienced agency should provide guidance on this, when you have clear goals and objectives that are conveyed clearly from the beginning of your engagement, then both the agency and your business are aligned. This ensures all marketing efforts are geared toward hitting the designated KPIs.
KPIs will vary based on agency type (Check out The Ultimate Guide to Marketing Agencies for more specific KPIs per agency type), but there are some initial metrics that are a good place to start if you’re working with an agency of any kind:
1. New revenue generated
To calculate ROI, you use the following formula:
(Sales Growth - Marketing Cost) / Marketing Cost = ROI
Sales growth is that new revenue generated; it’s a clear-cut KPI that can show real results and factor heavily into proving marketing ROI. If an agency brings in new revenue quickly and effectively, then that’s the best (and easiest) way to show their service is worth the investment.
2. New opportunities opened
Leads, clicks, and impressions can be helpful if taken with a grain of salt. However, the real magic happens when new opportunities are opened. These qualified leads have the potential to become customers, thus generating more revenue. That’s why discovery calls and opportunities are the true tests of an agency’s accomplishments.
3. Conversion rates
Conversion rates are arguably the most dangerous KPI but can also be extremely helpful if analyzed properly. It’s easy for an agency to present high conversion numbers, but those conversions don’t necessarily prove ROI. It’s crucial to have well-defined conversions; when it comes to conversions, it should be about quality, not quantity.
Take your website’s ‘contact us’ form for example. You want to see a high number of form fills. But if those form submissions are junk leads that aren’t converting to MQLs (and eventually SQLs), then the high conversion number ultimately was not advantageous. Monitoring and defining key conversions in a strategic way will help prevent ambiguous reporting.
What to Expect from a Growth Marketing Agency
By setting their own initial KPIs, clients can make sure that their agency is showing them the results that hold weight. Providing an agency with historical data from previous campaigns can help them understand what’s worked in the past (and what hasn’t) and inform their campaign strategies.
If you’re the one setting KPIs, then what should your agency be doing?
A marketing agency should help when it comes to setting KPIs and try to lead clients in the direction of high-quality metrics. An agency should also provide clear data and reports on those relevant metrics. Clients shouldn’t have to go hunting to find the numbers they’re looking for. An agency should use a reporting tool like HubSpot to showcase the right data clearly.
Lastly, of course, an agency should focus on meeting the KPIs you set. They should align campaigns and efforts with a business’s particular goals to maximize ROI.
Ultimately, a marketing agency should prove its worth through tangible results, which will help those who hired them to prove marketing ROI. This comes down to setting the right KPIs and hiring an agency that’s committed to delivering on them.
Want to Know More?
Looking for a growth marketing agency that can help you set the right KPIs and achieve them? Get in touch today!