More and more manufacturers are embracing inbound marketing in the 2020s. One reason for this trend is that inbound tactics (which take advantage of digital space) are very easy to monitor and track with quantifiable metrics. In this piece, we’ll explore how manufacturers can use these advantages to prove the ROI of inbound marketing.
The digital age has transformed the manufacturing sector. Marketing budgets in the industry remain small and focused (compared to consumer-facing businesses), but they’ve also seen a gradual shift over the last decade from trade-shows and boots on the ground to more internet-based efforts that leverage powerful marketing automation platforms.
One of the benefits of a digital approach is that the ROI of inbound marketing is highly trackable. Inbound lead generation and web-based actions are simple to quantify with hard numbers, easy to track over time, and allow you to to truly prove the return you’re getting on your investment — unlike many traditional, outbound channels like TV or print advertising, billboards, or direct mail.
Many manufacturers have been able to benefit from these advantages compared to the traditional tactics of yesteryear, like industry networking events and heavily referral-based strategies. In the 2020’s, it’s often been said that inbound marketing is the king of ROI. If you’re hoping to prove (or even just to evaluate) the value of inbound within your own manufacturing company, here are a few pointers to get you started.
Inbound vs. Outbound ROI of Marketing for Manufacturing Companies
Door-to-door sales and cold calls are two examples of outbound marketing, where a marketer reaches out directly to potential customers to assess their interest in the product and fit as a sales lead. This requires you to know where to find the most qualified buyers and also how to contact them.
Inbound marketing is the opposite. You create an incentive for the best prospects to come to you, generally by creating easily accessible, informative, and helpful online content that also spreads awareness of your brand and funnels visitors towards your company’s website for more information (or to contact you).
Inbound content may take the form of how-to guides that you share on social media, an active business blog, persuasive case studies and whitepapers hosted for download on landing pages attached to your website, and much more. Social posts and web pages can both be promoted with additional budget to appear higher in social feeds and Google search results, or you can rely on SEO practices such as strong, relevant keywording to earn traffic more organically.
Many outbound efforts take a ton of time, but may also yield little to no leads. Inbound allows you to engage an audience that is already interested in what you have to offer and also gives you hard numbers to help you qualify leads or track conversion rates.
Inbound Metrics Are More Trackable!
One of the major differences between these two styles is the trackability of digital marketing ROI. Since inbound is primarily in a digital space, it’s very easy to track. All sorts of web behaviors — page visits, email opens, link clicks, downloads, time on page, form completions, etcetera — can be automatically monitored and mapped with tools like Google Analytics or your marketing automation platform. This makes the ROI of digital marketing for manufacturing companies much more quantifiable than a blurry tactic like direct mail, TV advertising, or a flurry of overlapping personal conversations at a trade show, where it’s hard to say for sure how many leads converted from the total audience exposed to your message.
One example of a useful, easily trackable metric for inbound marketing is “Cost-Per-Acquisition” or CPA. Here’s the formula:
- Cost-Per-Acquisition: Total marketing spend divided by the number of acquisitions your marketing efforts have generated.
With inbound, you’ll know exactly what it costs to promote a post or invest in each month’s marketing budget, and you’ll be able to see (with digital tools) exactly how many qualified leads resulted from your digital efforts, along with where they came from and which content or CTA ultimately converted them.
Link clicks, by and large, are seen as a vanity metric by professional inbound marketers. Eyeballs on a page won’t mean much if the visitor doesn’t take a meaningful action. It’s a better practice to focus on conversions (for desired actions, such as downloading a whitepaper or filling out a contact form).
Inbound is King. The Proof is in the Data:
The best way to prove the ROI of inbound marketing for manufacturing companies is with current data, across many businesses, with a large sample size...and there’s plenty out there. The HubSpot 2020 State of Inbound Report, for instance, had a lot to say about the payoff of inbound marketing in today’s world. Their study found that:
- Inbound is 4x more likely to be effective than traditional marketing.
- 1 in 3 marketers agrees that traditional marketing tactics are overrated in value.
- Organizations that can calculate the ROI of inbound marketing are 1.6x more likely to devote a larger budget for marketing.
- 59% of marketers say that inbound provides the best leads vs. 17% that say traditional marketing channels give the best results.
Other recent HubSpot data has reached similar conclusions regarding inbound results and ROI. For example:
- 41% of CMOs/CEOs say that inbound has shown the positive ROI they wanted in the past year.
- 93% of companies that use inbound have seen improvements in lead generation.
- Inbound leads have been shown to cost 61% less than outbound leads.
Data from the Content Marketing Institute has also shown that inbound channels cost 62% less than traditional channels while each dollar spent on inbound generates 3x as many leads. But why is inbound marketing so broadly effective in the digital era? Well, the data also shows that 93% of business buyers are starting off their purchasing process with a search engine. While manufacturers were once able to get by on referrals and one-on-one conversations with prospects, today’s buyers are turning to the internet to conduct research and find the products they need. This has never been more true than in the months since the onset of COVID-19.
The most recent Thomas Industrial Survey proved that in the wake of the pandemic, North American manufacturers in particular were 21% less likely to invest in trade shows than before the pandemic. At the same time, inbound marketing for manufacturing companies became incredibly popular. Survey respondents increased webinars and virtual events by 20%, search and social media marketing by 14%, and website-based marketing efforts by 12% compared with the time before COVID-19.
When Will I See the ROI of Inbound Marketing?
It’s typical for traditionally proactive marketing efforts, like advertising and outbound cold calls, to yield better results in the short term. You’re able to engage many leads directly and instantly (although a large number may also not be interested).
An inbound presence takes longer to ramp up. However, it’s also a highly scalable long-term marketing strategy that has the potential to yield incredible ROI — continuously — once you establish an audience and everything gets into gear. The asynchronous nature of inbound content is one of its biggest advantages. Whereas a salesperson can only call so many people per hour, and scaling up that operation would require more salespeople, inbound content builds up into a library of helpful material that lasts as long as you continue to host it and can be accessed by any number of potential visitors, simultaneously, at any point in the future.
One HubSpot study of over 5,000 customers as well as surveys from 236 professionals found that 93% of companies see increased lead generation from inbound, and over 80% are able to achieve positive results (more leads and more sales) within 7 months.
It’s important to remember that an inbound marketing strategy is about building a foundation that will fuel all future growth.
While it’s not impossible to see results from your inbound marketing strategy within the first month or two, results take time to truly get moving. If you’re growing concerned with your marketing timeline, remember that you’re building something, and building a foundation for all your future successes can’t happen overnight.
The more committed your marketing efforts are to this goal, the faster the results will show up. As Forbes reports, “To truly be successful in inbound marketing, you need to jump straight in. No trial run. No dipping your feet in the water. Fully commit, stay engaged and patient, and you will see positive results.”
How to Measure the ROI of Digital Marketing for Manufacturing Companies
Inbound marketing success should be measured primarily on your ability to attract leads. The simplest metric for showing this form of ROI is by calculating Cost-Per-Lead (CPL). Here’s the formula:
- Inbound Cost-Per-Lead (CPL): Total marketing spend on inbound tactics divided by total new leads from inbound sources (website, blogs, landing pages, contact forms, search engine ads, social post clicks).
How exactly you define a “lead” is up to you. Not all web visitors are leads, but everyone who ultimately calls your company, sends you personal information, signs up for a newsletter, or downloads your content almost certainly is. By tracking CPL data over time, you’ll develop a clear idea of what to expect from a given monetary investment in inbound efforts. In other words, how many leads you can expect to gain from each influx of marketing money.
If you want to get more granular and attach your marketing to concrete revenue gains, it’s possible you’ll want to include additional metrics and KPIs related to ROI. You could consider tracking:
- Inbound Cost-Per-Sale: This is total marketing spend on inbound tactics divided by total sales that came from inbound leads. The result will show you how much budget it takes to earn a sale. Compare this with the average value of each sale to see whether you’re making more money than you’re spending (per sale).
- Inbound Revenue-Per-Lead: Take the total revenue earned from inbound leads (over a given time period), and divide it by the total number of inbound leads (same time period). This shows you exactly how much revenue one inbound lead is worth, on average.
Thomas conducted research on digital inbound marketing for manufacturing companies (and other industrial companies) to establish strong business-to-business benchmarks for 2020. If you’re meeting these thresholds for various inbound metrics, you’re at or above average in the manufacturing space:
- The average pages per session are two pages
- The average session duration is 1 minute to 1 minute 30 seconds
- The average bounce rate is between 30- 60%
- The average click-through rate to a website page is at 1.5%
- The average conversion rate using a contact us form is 10%
- The average conversion rate using an RFQ form is 20%
- The average conversion rate for an eBook download is 25%
Report Back Regularly to Prove Your Digital Marketing ROI
Decision makers like to see results. As with any new strategy or initiative, it can be hard to get leadership invested in it unless you can show proof that the results were, are, and will continue to be worth the effort.
Urge patience if your digital, inbound marketing efforts are just beginning, but keep highly detailed records of your results over time, so that you can provide quantifiable proof of all growth and improvement once the inbound engine revs up to full speed. The high visibility and precision of inbound data arms you with the facts you’ll need to answer questions and relieve all concerns. Once you know for certain that inbound marketing has helped your bottom line, your company will have more confidence investing in continued efforts while reaping the real rewards.