It’s hardly a secret that effectively using your martech stack can mean greater marketing ROI as a whole. Indeed, Gartner Research predicts that CMOs who utilize even 70% of their martech stack’s capabilities will achieve 20% better marketing ROI than peers who fail to put martech to good use. But before organizations can use technology to improve overall marketing ROI, they often must first demonstrate the potential ROI of the martech solution — before it’s even been purchased and implemented.
Unfortunately, proving martech ROI is something many marketers give little thought to, both before and after a purchase — until the renewal date creeps up on them. Once leadership starts asking for the ROI of the martech tool before they sign off on another check, proving ROI suddenly becomes much more important.
Trying to prove the ROI of your martech purchase shouldn’t happen after you receive the 30-day renewal notice. In fact, it shouldn't even happen after the technology is purchased. Rather, setting success metrics should happen before the technology is even purchased, and those metrics should be based on an intentional business case for the technology.
In this blog, we’ll break down the what, how, and who of calculating martech ROI so you can confidently estimate the value of your marketing tools and effectively make the case for your martech stack.
What to Consider When Calculating Martech ROI
According to a 2022 HubSpot survey of marketing leaders, 33% said that using data to demonstrate ROI has become even more important. Given the increasing revenue targets but decreasing budgets in 2023, proving ROI has become more of a marketing bastion than ever before.
So, when it comes to calculating the ROI of your martech this year, what should you consider, and when?
Metrics to Consider for Proving Martech ROI
Over the last five to ten years, B2B marketers saw a marked shift from calculating ROI with leads and MQLs to calculating it with pipeline and revenue instead. HubSpot survey data indicates this is still the case, with 60% of marketing leaders reporting sales as the most important metric to track when measuring marketing performance.
However, it can be difficult to tie martech ROI directly to pipeline. Martech is often purchased to enable the work that allows marketing to influence revenue, and those enablement metrics can be a step removed from sales funnels.
It’s important to note that the pipeline effects of martech purchases are often downstream. Some core metrics to consider when evaluating martech ROI that can be just as impactful as revenue/pipeline include:
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Efficiency and time savings
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Efficacy in engaging the right audiences with the right content and at the right time
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Driving awareness
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Meeting setting
This isn’t a comprehensive list by any means; marketing leaders should examine their business case to determine which metrics will be the most applicable to their tech stack and intended outcomes.
When to Consider Proving Martech ROI
Ideally, you should consider proving the ROI of your martech tools during the presale process, not after you’ve purchased it. How? By creating a business case for your martech tool before signing on the dotted line.
However, for the tech already in your stack, you might want to retroactively examine the business case for each technology and establish those ROI metrics now. That way, you can keep tabs on them between now and when your renewal comes due. Additionally, as we discussed in a prior article, once you have these metrics, tell your Customer Success Manager (CSM) what they are so they can help you track them along the way — they have a vested interest in doing so!
How to Inform Martech ROI Using a Business Case
Building a business case for each technology should define the metrics you want to track, which will in turn influence your ultimate ROI calculations of the tool. With your business case, you’ll define metrics and use cases for the technology in order to evaluate whether it has the desired impact over time.
Your business cases should answer the question: In one month, six months, or eight months from now, how will you know whether the technology is achieving the intended outcomes? That way, rather than proving ROI right before renewal, you can prove it as you go along. If you aren’t hitting the mark, you’ll have time to examine why and make changes to get you back on track.
Building a business case should be done for each tool regardless of purchase time, though doing it beforehand is ideal. Three areas to consider building a business case for include:
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New tech requests: Develop a process for building business cases for new requests, either for new technology or new use cases of existing technologies. That way, your whole team has a process to defer to when new technologies are implemented.
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Existing tech: If a business case wasn’t made pre-sales, go back and retroactively decide on your key metrics. This will help you understand the metrics you’ll want to track in order to prove ROI looking back, as well as in the future.
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Tech you inherited: Perhaps someone purchased a tool but has now left the company. You’ll need to work with your CSM to understand the technology’s uses so you can build a business case for how to put it into action. This will help you define the key metrics needed to gauge its efficacy.
We covered examples of business case templates in our Q1 Webinar: Make 2023 The Year You Finally Get Your Tech Stack Working For You, but here’s a basic example:
Calculation Methods
As we’ve examined earlier, calculating ROI for martech is much more than following a simple formula like ((Gain – Cost)/Cost) x 100 = ROI%. While those can be helpful in some areas, there aren’t always direct costs or gains you can attach to martech tools.
To avoid the dollar-for-dollar paradigm and avoid missing value that isn’t inherent in such calculations, think about tracking metrics in one of two ways instead:
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Baselines and benchmarks: A simple way to evaluate ROI is by setting former baselines or benchmarks across key metrics so you can easily compare the impact of the before and after of your martech tool. For example, you might track the answers to questions like:
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What did conversion look like before the tech?
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How has engagement improved after implementing the tech?
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Industry standards: Sometimes there are no before or after benchmarks to reference when implementing a new technology because you’ll be evaluating net-new metrics. In that case, it’s helpful to ask your CSM what industry standards exist in the space or what measurable impact should be articulated for their technology. You might ask questions like:
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What does an industry best-practice look like?
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Are we hitting that mark?
Once you establish the best method of calculating martech ROI, you can track the right metrics to help indicate whether it's matching the intended business cases or not.
Who Should Evaluate Martech ROI?
Finally, the question remains of who should determine the metrics ultimately used to calculate ROI. Should it be the team implementing the technology, or the leader reporting on outcomes?
As we discussed in our Masterclass series about developing an integrated technology ecosystem, a designated martech council should ultimately determine how your technologies should work together. The council should take the new requests for use cases, new technology, and business cases before determining the appropriate ROI evaluation metrics.
Because the martech council helps to ensure that all martech investments are focused and prioritized on marketing and corporate objectives, they are the people best suited to guide the metrics that will prove value. The council sets the priorities and will know best the results they want to achieve from the integrated martech stack. The martech council should be informed if a technology is not performing as intended at least every quarter so they can help address the underlying reasons, be it people, process, or technology.
All together, this is a martech council performing its intended function — elevating the need for tech to be an integrated part of the go-to-market, not an afterthought.
As we’ve outlined above, a business case should include clearly defined use cases for your technology. Indeed, those use cases will be integral in defining the type of metrics you will track to prove ROI. In the next article in our MarTech Masterclass series, we’ll dive into use case development, outlining how your use cases will increase your martech efficiency and campaign effectiveness, including ROI.
