What is the ROI of Agile Marketing? This is a common question from leaders and decision-makers and is not easy to answer. The best answer requires you to establish a baseline before you embark on your Agile marketing journey, decide which incremental improvements can be attributed to Agile marketing, and keep track of your costs for implementing Agile marketing.
The formula for any marketing ROI calculation looks like this:
Let’s look at an example of how to calculate the ROI of Agile marketing.
- Your baseline for leads generated prior to implementing an Agile test-and-learn approach was 100 leads per month.
- After twelve months of applying Agile techniques, your monthly leads have grown to 300. The previous year, the team delivered 1,076 leads. This year, the team delivered 2,204 leads, a difference of 1,128 leads.
- Not all of that growth in leads can be attributed to Agile marketing. After all, in the previous year, you grew your leads per month from 80 to 100 leads per month without implementing Agile. You decide to attribute 704 of those additional leads to the improvements using Agile, as your goal was 1500 leads for the year and you exceeded that goal.
- The calculated average value of a lead is $20,000 per lead.
- The cost to bring a consultant in, train everyone, and spend a year coaching the team was $100,000.
The ROI of Agile marketing would then be the incremental value delivered (704 additional leads for the year times $20,000 per lead equals $14M) minus the cost ($100,000), divided by the cost, expressed as a percentage. In this simplified model, the ROI of Agile marketing is 13,984%. Needless to say, that’s a very good ROI.
What if You Don’t Have Metrics to Calculate the ROI of Agile Marketing?
Start collecting the right metrics today. Establish a baseline. Get agreement from the business stakeholders that you’re measuring the right things and that your approach to calculating the ROI of Agile marketing is one that they’ll accept. You may need to involve finance, as they are more likely to accept your numbers if you involve them early.
You may also be able to take a historical view if you have metrics going back to when you started to adopt Agile in marketing. The key is to be conservative in your attribution to Agile marketing. If your growth rate was 3% prior to implementing Agile and now your growth rate is 4%, only attribute the difference (1%) to Agile marketing. This is conservative because as companies grow, they find it difficult to maintain the same rate of growth on larger and larger numbers.
Evaluate Multiple KPIs - Not Just ROI - To Measure Agile Marketing's Value
ROI is important but not the only measure for measuring the ROI of Agile marketing. Also, look at market share, profitability, customer retention, and acquisition costs. Gartner has a very interesting eBook about proving the value of marketing that makes this point about KPIs.
What Other Companies Have Experienced
There are many case studies of Agile marketing. Unfortunately, few of these case studies provide all the details necessary to calculate the ROI of their Agile marketing experience. But you might be able to extrapolate from their numbers to build a business case for implementing Agile in marketing, with the promise to publish real ROI numbers after a suitable time period.
- By shifting from an output-based approach to marketing to an outcome-based approach, Colt Technology Services realized up to 500% improvements in some of its most critical business measurements. What would it mean to your business to increase some of your most critical business metrics by 500%?
- By implementing Agile technologies in its marketing organization, HID Global achieved its annual target pipeline contribution three months early and achieved growth of 116% year over year. What would it mean to your business to grow your pipeline by 116% year over year?
- By implementing Agile marketing, Northern Arizona University increased its productivity by 400% while reducing its costs by 20%. What would it mean to your business to increase productivity by 400% and decrease costs by 20%?
The ROI of Agile marketing is not easy to calculate but calculating it in your business can greatly increase your credibility and demonstrate the value of the investment made in applying Agile to your business.
