The ROI Equation for Building Products Marketers

In recent years, our ability to analyze user behavior and determine how Facebook, SEO, email and other tactics affect the purchase decision has improved. However, the challenges of two-step distribution make determining ROI especially difficult for most building products manufacturers. It can seem impossible to account for all the variables that result in purchase when you have little insight at the dealer or contractor level.

With the exception of reduced visibility, the funnel isn’t much different than it is for other marketers. The challenge is connecting marketing metrics to sales metrics. At True, we use three tactics to bridge the gap.

Determine a non-sales marketing metric that indicates purchase

You can start to bridge the marketing ROI gap by focusing on what can be quantified, rather than what can’t. When a direct connection can’t be made between marketing efforts and offline sales, an intermediate, online conversion can help connect the dots. Examples of these include:

• Requests for more information
• Free product samples
• Visiting a dealer
• Downloading an online resource

Web experience planning is crucial at this point to figure out how users engage with your site and what they want to learn. Focus on finding one relevant, measurable action for each objective.

Determine the cost for your non-sales marketing conversion

The calculation is simple:

Cost of the program / Non-sales marketing conversion = Cost per conversion

The first question at this point is always, “What’s a good cost per conversion?” The better question is, “What’s a profitable cost per conversion?” The building products industry has a wide range of price points for a unit or an entire job. The drywall for a new construction build may be roughly $500. New siding is likely to cost upwards of $10,000. The siding company can afford a much higher cost per conversion and still be profitable.

Simple calculations for online conversions are the next step toward demystifying ROI. Determining front-end marketing costs and outcomes based on online conversion points is easier.

Determine the value of your non-sales marketing conversion

In a two-step distribution model, it’s nearly impossible to track every sale at the end-user level. What’s important is identifying trends to learn how different audiences buy. Rather than track every sale, use trends and averages to start to unmask ROI. There are three pieces to uncovering these trends:

• Organized data – Whether you have a spreadsheet or a CRM, knowing where your customers come from, what audience segments they belong to and which sales rep closed the deal is important. The more information you have about your customers, the more reliable your assumptions about revenue per sale.
• Open communications with sales reps – It’s important to get the right feedback from your reps. They know how many architects, builders and contractors they call on in a month. They can also tell you how many they feel ended in a sale. Depending on the rep and relationship, they may be able to shed insight on one-time customers vs. customers likely to repeat purchase.
• Patience – Because two-step distribution is so fragmented, it’s important to remember this is an ongoing process. The more you learn about your audience and test your model, the smarter you become. Once you have a clear model you can test your inputs. Shift marketing dollars regionally, refocus audiences and change marketing messages. As long as you have a wealth of customer data, you will learn how these variable affect sales.

When you lose visibility at the point of sales, ROI is always going to be elusive, but we have the tools to audit our marketing efforts and track trends with sales.

Want more tips for unlocking ROI in the building products industry? Download our ebook "5 Tips to Unlock ROI in the Building Industry"