or B2B marketers, delivering high-quality leads is essential for job performance. Demonstrating a direct and positive return on investment, however, means that B2B marketers will benefit from higher budgets, more authority, and faster approval processes.
For B2B marketers who have to navigate longer-sales cycles with multiple influential stakeholders as part of each purchasing decision - often from within a sales-driven organisation - delivery of a steady stream of leads while demonstrating positive ROI can sometimes be challenging.
LinkedIn offers a premium advertising platform for B2B marketers who can target their audience far more precisely than is possible on other platforms. Unique to LinkedIn is the ability to target people based on their professional demographics – including job title, job function, current company, seniority, education, and many more. For this reason, LinkedIn charges a premium for advertising. The question marketers must ask themselves, therefore, is whether it’s worth paying more for fewer, higher-quality leads, or less for (typically) lower-quality leads through other platforms.
In this article, we look at how to calculate the return on investment on your LinkedIn budget and what to measure to diagnose problems and improve upon past performance.
Let’s start with a couple of assumptions:
- LinkedIn B2B leads typically range from $50-100 each – so on average let’s call the cost of a LinkedIn lead $75.
- Lead: Sale conversion rates vary depending on a few factors which we discuss later but because we are writing for the B2B sector we will assume an average conversion rate of 10% (which is what these businesses should be aiming for).
Now let’s look at the variables that will affect the outcome:
- The value and relevancy of your offer – the thing you are promoting – will affect your cost per lead (CPL). If your offer is relevant and compelling, you can expect a lower CPL.
- The size of the audience you are targeting, and the accuracy of targeting will affect your CPL. You pay every time a person sees your ad which means that if you don’t have accurate targeting then you will waste your budget on the wrong audience.
- Your lead: sale conversion rate will be impacted by the effectiveness of your sales funnel and the strength of your brand. If a lead comes in and you don’t act on it, or your brand has a bad reputation, your conversion rate will suffer.
What to measure and change:
- If your average CPL is over $75 then look to the value of your offer and the size of your audience. Start with your audience as this will require less additional effort and money. If the audience being targeted is 100% accurate then look to your offer.
- If your lead: sale conversion rate is below 10% then start with re-evaluating your sales funnel – that is the follow-up activities which drive a marketing qualified lead to a sales qualified lead and a sales qualified lead to a sale. If your offer, your targeting, and your sales funnel are on-point, then a re-evaluation of your brand and overall marketing strategy will be required.
You can calculate the ROI you should achieve – given the assumptions mentioned above – using our LinkedIn ROI Calculator (no contact information is required to view results).
If you’re sitting back wondering why to bother with calculating the ROI on LinkedIn or other digital marketing activities when you’ve got an active salesforce, we challenge you to compare the costs - including the opportunity cost - of the man-hours required to generate qualified leads manually compared to the digital route. For example:
- The cost of a large event sponsorship, including sponsorship, travel, printing, booth furniture, organising, etc. will typically set you back on average $50,000-100,000. Use our calculator above to compare the revenue generated from LinkedIn and the revenue you expect to generate – or have generated in the past – from a large sponsored event for the same investment.
- The cost of a telesales blitz will set your business back by anywhere between $400-2,000 per day including salary and the opportunity cost of charge-out fees for consultants who work in both sales and operationally. Using our calculator, compare the estimated revenue from just three days of a sales blitz and compare that to the results from previous sales activities.
- The cost of an outsourced telemarketing campaign will set you back around $10,000. Add even half of this budget into our calculator and compare that to the revenue you received from the last telemarketing campaign you ran.
If you'd like us to review your current campaign performance and offer advice, or if you want help with setting up and managing a LinkedIn campaign – including creating content, we can help with that . Go ahead and send us an enquiry and we’ll get straight back to you with next steps.