Julia McCoy earned her place as a top-30 worldwide content marketer two years ago. She’s the author of two bestsellers on the topic, the creator of an online course and the founder of a content agency – Express Writers.
Today, her agency is about to hit $1M in yearly income for the first time.
McCoy’s position in the industry means she talks to hundreds of clients, peers, and content marketers on a regular basis online. One problem she sees over and over: the issue of executive buy-in for content marketing.
Executives will drop $7,000 in a week on Facebook ads but still fail to see why they should pay $1,000 for content marketing. Why is that?
McCoy recently sat down to take a look at industry benchmarks, comparing them with her own success with content marketing. Her goal was to create a formula that any agency or in-house member can take to their boss to predict the return on investment for content marketing.
McCoy has seen firsthand the success of using organic content marketing. Her agency is 99% fueled by this strategy (comprising new client leads and 99% of sales to date) and she’s hit over $4 million in total sales, across seven years.
Here’s the formula and underlying benchmarks McCoy outlined, ready to take to any boss to convince them of the ROI of content marketing.
The Content Marketing Trifecta
McCoy calls the formula for figuring out the ROI of content the “content marketing trifecta.”
This is because, at its core, content marketing is about driving targeted traffic to a website, converting that traffic into high-quality leads (targeted, “ideal” clients ready to buy) and converting those leads into sales.
In short, this trio of conversions boils down to:
- Earned traffic = high quality leads = sales
To figure out the ROI from these conversions, McCoy determined a few benchmark numbers to use.
Conversion benchmarks
There are two basic questions when approaching a content marketing ROI formula based on conversions.
- What’s the average rate that traffic converts to high-quality leads?
- What’s the average rate that those leads convert to sales?
McCoy looked at solid data to get the answers.
First, she looked at Marketing Sherpa’s research about conversion rates on organic traffic. This study found the average conversion rate for traffic-to-leads across industries is 16%.
Next, for the leads-to-sales conversion, McCoy honed in on the fact that SEO-generated leads close at an average rate of 14%, while outbound leads have a 2% close rate.
These benchmarks (16% for the average traffic-to-leads conversion rate; 14% for the average leads-to-sales conversion rate) provide the base of the content marketing trifecta formula.
The Content Marketing Trifecta formula
Using the benchmark numbers and an individual businesses monthly website traffic data, McCoy’s formula can estimate the ROI of content marketing in earned leads and sales:
- Monthly Visitors x 16% Organic Traffic to Lead Conversion Rate = X Leads/Month
- X Leads/Month x 14% Lead to Sale Conversion Rate = X Sales/Month
The formula in action
Here’s how to use the formula via a hypothetical scenario.
For example, say your business gets 1,000 monthly visitors on average:
- 1,000 Monthly Visitors x 16% Organic Traffic to Lead Conversion Rate = 160leads/month
- 160 Leads/Month x 14% Lead to Sale Conversion Rate = 22.4 sales in revenue/month
A business with a monthly traffic average of 1,000 could expect an ROI of 160 leads per month and 22.4 sales per month if they start using content marketing.
Does the formula hold up in real life?
Next, to see how the formula held up for an actual business, McCoy tested it out using data from her own agency, Express Writers (EW).
In January 2018, EW’s monthly website traffic hovered around 15,470. Plugging that number into the formula brings these results:
- 15,470 monthly traffic x 16% traffic-to-leads conversion rate = 2,475 Leads
- 2,475 leads x 14% leads-to-sales conversion rate = 346 Sales
Finally, McCoy compared the estimated number of sales to the actual sales in January for EW.
- Estimated sales: 346
- Actual sales: 289
The actual sales were 57 short of the estimated number. McCoy was able to account for the discrepancy due to her agency’s shifted focus to only serving clients who are a good fit for EW’s services.
As a result, the average order value went up to $416, a record high for the agency.
With this factor taken into account along with the estimates, the formula holds up well.
Use concrete numbers to get executive buy-in for content marketing
The ROI of content marketing is easier to quantify with concrete figures. When executives can see the financial gain that is possible, they’ll be far more likely to get on board.
McCoy’s content marketing trifecta formula is an easy tool that will help inspire the buy-in that most marketers need to get the go-ahead.
Source: Forbes