Calculating ROI (Return on Investment) is based on a simple formula involving the gain from an investment, the cost of the investment and the resulting ROI. Here it is:

Yet, to many, it is one of the most desired but vexing business measurements. Why?

Here are the 10 most common mistakes businesses make in calculating ROI.

1. CONFUSION BETWEEN CASH FLOW AND GAINS: A common mistake in calculating ROI is comparing the initial investment, which is always in cash, with the gain as measured by profit or (in some cases) revenue. And not basing the gain on cash flow. For example, customers might be billed but that doesn’t mean they all pay on time. Or shipments might have gone out. But some goods might have been returned. The correct approach is always to base the gain, either profits or revenue, on the cash flow received.
2. UNDERESTIMATE INITIAL COSTS: Many businesses try calculating ROI without first properly accounting for all initial costs. As a result, they may end up underestimating initial costs. Before you start your calculations, know what your initial costs are. Here are some of the areas that might be missed.
3. FAIL TO INCLUDE PEOPLE’S TIME: One of the reason ROI is a highly regarded measurement is it includes not just out-of-pocket costs but operational costs like labor. Most business owners are aware that time is money for any company. However, when it comes to calculating ROI, they forget to consider the value of their time or that of their employees.
4. DON’T KNOW THE MINIMUM RETURN REQUIRED: Take into consideration the minimum ROI that your company requires because there probably is one. Look at the relative risks, cost of capital, and opportunity costs. Here’s what experts say is a good ROI for various industries. Even if it hasn’t been formally stated, have the discussion to bring it out when you start calculating ROI.
5. MEASURE THE WRONG THING: In 2010, Pepsi launched the Pepsi Refresh Project, an initiative where people could submit and vote for their favorite nonprofit projects to receive grants from Pepsi. The project generated 3.5 million Facebook likes, 60,000 Twitter followers, and over 80 million votes for nonprofits. But it didn’t sell more Pepsi. Pepsi cancelled the project in 2012 after falling from second to third place in national soda market share. It was a noble initiative, but likes, followers and votes were not the right measurements for ROI.
6. MEASURE TOO MANY THINGS: In data-rich environments, it’s easy to lose sight of the metrics that really matter. Before calculating ROI, know the Key Performance Indicators (KPIs) for your business. KPIs are the metrics that matter for any business. They are metrics that, just like your ROI, have a target. If you don’t know them, you may find yourself measuring too many things.
7. DON’T LEVERAGE EXISTING CAPABILITIES: A manager at a large wireless telecommunications firm recently called for help with her budget. She’d “taken a stab” at quantifying the ROI for the company’s data warehouse and wanted to review her calculations. Her worksheet—which included a rigorous mix of hardware, software licenses, maintenance, burdened staff, and consultant costs, etc.—made clear that she’d forgotten an important step: Leverage current IT infrastructure and resources to reduce cost estimates and make a project more attractive to business executives.
8. DON’T GET THE BUSINESS TEAM INVOLVED: No one wants to own ROI. Calculating ROI can be difficult; understanding all the required skill and resource components can challenge even the best manager. When the planning phase of a project occurs, most managers take it upon themselves to calculate ROI on their own. It’s important that baseline ROI numbers are adopted by a team and accepted by the key business stakeholders.
9. DON’T ACCOUNT FOR THE FULL SALES CYCLES: In the B2B buying process, it can take many months for a prospect to go from first touch to closed sale. If you try to calculate your ROI too soon, you may undervalue the amount of impact that investments are making. In the B2C buying process, it may take time to generate awareness, educate consumers and gain trial. But, once you do, buying frequency might increase at that point. Pick a time period to measure your ROI that makes the most of the resources invested.
10. DON’T ACCOUNT FOR CHANGE: Nothing is certain. You can’t know what competitive developments, new trends or surprises might occur during the measurement period for your ROI. So don’t treat ROI as an area that you “set and forget.” Look at it regularly. Evaluate against KPIs. And be prepared to make revisions as necessary. Anything worth measurement should be view with the most current data.

Do these mistakes help you to understand the correct way to calculating ROI. Does your business need help in doing and managing ROI.

Good ROI measures the profitability of investments and helps objectively assess future success.

ROI also demonstrates how skilled the people in charge are at generating profitable growth and managing company funds wisely.

What is a good ROI? 10 experts state explain their standards for a range of industries.

1. Adverstising
2. Business Owner
3. Customer Relationship Management (CRM)
4. Customer Service
5. Entrepreneur
6. Investing
7. Marketing
8. Digital Marketing
9. Real Estate
10. Restaurant
11. Venture Capital

Here’s what they have to say.

GOOD ROI FOR ADVERTISING (GOOGLE ADWORDS)

“Research show businesses make an average of $2 in revenue for every $1 they spend on AdWords. According to Google, campaigns that use the Conversion Optimizer achieve a 21% increase in conversions while decreasing CPA by 14% on average.” – Elisa Gabbert, Sr. Manager of Content and SEO, WordStream

GOOD ROI FOR A BUSINESS OWNER

“Strive to make at least triple the value of the hard cash you have invested in your business. Average angel investors and venture capital fund investors shoot for a return of 4 to 10 times their invested capital.” – Start on Purpose

GOOD ROI FOR CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Nucleus Research finds that for every dollar spent on CRM implementation, returns can peak at a stellar $8.71 (2014). That’s a $3.11 jump from three years ago when the strongest returns topped out at $5.60.” – Sarah Brigham, Nutshell

GOOD ROI FOR CUSTOMER SERVICE

“In research on actual customer transactions published in the Harvard Business Review, researchers found that among thousands of customers studied, customers who had the best past experiences spend 140% more compared to those who had the poorest past experience.” – Elen Veenpere, Groove

GOOD ROI FOR AN ENTREPRENEUR

“My advice to entrepreneurs is to try to at least double total invested capital plus the value of any contingent liabilities associated with guaranteeing bank debt, real estate leases and equipment leases. Building a successful business is hard work. Earning a salary is not enough to compensate for all the risks and effort involved with business ownership.” – Susan Schreter, Fox Business

GOOD ROI FOR INVESTING

“A really good return on investment for an active investor is 15% annually. It’s aggressive, but it’s achievable if you put in time to look for bargains. ROI, or Return on Investment, measures the efficiency of an investment. For every dollar you put in, what kind of profit can you expect.You can double your buying power every six years if you make an average return on investment of 12% after taxes and inflation every year.” – Trendshare

GOOD ROI FOR MARKETING

“A good ROI for marketing is 5:1. A 5:1 ratio is middle of the bell curve. A ratio over 5:1 is considered strong for most businesses, and a 10:1 ratio is exceptional. A 2:1 revenue to marketing cost ratio wouldn’t be profitable for many businesses, as the cost to produce or acquire the item being sold (also known as cost-of-goods-sold, or COGS) is about 50% of the sale price. For these businesses, if you spend $100 in marketing to generate $200 in sales, and it costs $100 to make the product being sold, you are breaking even. If all you accomplish with your marketing is break even, you might as well not do it.” – Chris Leone

GOOD ROI FOR DIGITAL MARKETING

“According to Neilsen, the average marketing return on investment is $1.09. A $1.09 ROI means that for every $1 spent, the company generates $2.09 (for a profit of $1.09). The top 3 marketing media with the highest average return on investment are email marketing, search engine optimization, and direct mail. Tracking source of sales to be able to calculate return on investment from your marketing initiatives is critical to being able to improve the effectiveness of your marketing spending.” – Profitworks

GOOD ROI FOR REAL ESTATE

“Without using any debt, real estate return demands from investors mirror those of business ownership and stocks. The real rate of return for good, non-leveraged properties has been roughly 7% after inflation. Since we have gone through decades of 3% inflation, over the past 20 years, that figure seems to have stabilized at 10%.” – Joshua Kennon, Managing Director, Kennon-Green & Co. 

GOOD ROI FOR A RESTAURANT

“If by ROI you mean the profit realized annually by the average restaurant, it is very consistent across the industry: 3–5% according to several sources. Extremely well run restaurants or very high-end places might make as much as 10%, but those are the exceptions — not the norm. I would be very suspect of any restaurant that claims to achieve 15–25% net profits.” – Chuck Rogers, New Orleans Restaurant Owner

GOOD ROI FOR VENTURE CAPITAL

“Venture capital (“VC”) funds, as well as experienced angel investors, specialize in investing in startup and growth-oriented privately held companies. They understand the statistical risks of business failure within their investment portfolio. They know that on average, only four out of 10 investments in promising entrepreneurial companies will deliver any profit to VC fund investors. This is why VCs and angels aim extra high and turn down investment opportunities that don’t represent a “grand slam home run potential” to the overall fund.” Susan Schreter, Fox Business

Do these example help you understand what is a good ROI and why? How is your business measuring up? Or, if you don’t know, do you think it’s worth knowing what is the ROI for your business?

ROI (Return on Investment) is the basis from which informed investment decisions are made.

The ROI formula only requires two numbers; the cost of your venture and the return made from that venture. But there are inputs that go into each. For many, this is where the simple gets complicated. But it doesn’t have to be?

Here are 8 surprisingly simple steps to calculate ROI.

STEP #1: START WITH A BASELINE

Return from a new venture has to first take into account what occurred before. So you have to establish a baseline. In our experience, there are only three baseline scenarios. In Scenario #1,  the venture is just beginning so there is no baseline. There is a clean slate. In Scenario #2, the new venture is trying to change just one area of a company’s operations (e.g. digital, call center, human resources). The baseline in this case is the return in this area from prior period. In scenario #3, the venture involves a change or transformation in the company that likely to impact a number of areas. For example, a business generates revenue through a sales force, call center and website. They are investing in digital operations by upgrading the website, building a mobile app and improving the online selling infrastructure so they can spend less in other areas. In this instance, the baseline is the amount the website generates currently based on a total percent of the company’s operations.

STEP #2: DECIDE IF RETURN IS REVENUE OR PROFITS

Be clear at the outset how you will measure the return in dollars. Is it revenue (sales) or profits? The latter in many cases is the most desirable measure. But it is harder to understand and control. For example, a company produces a food product. Profits requires a knowledge of the cost of goods, shipping and retail allowances. These are often hard to know now and harder to predict in the future. Because revenue has more factor within a company’s control, it is generally easier to forecast. While some insist profits is the way to go, in our experience, revenue is also is a good indication of success and basis for decision making.

STEP #3: DETERMINE THE TIME FRAME

Before you can determine the return, you have to know how long it is going to take. In most cases, the time frame for ROI is between one and two years. This is due to: 1) Functional activities like the time it takes to create and build new assets (e.g. website, data center and buying infrastructure) and 2) customer uptake for awareness, consideration, trial and repeat purchases. To help understand customer uptake, it helps to know the buying frequency and Annual Customer Value (ACV).

STEP #4: DECIDE INPUTS FOR THE RETURN

The return is a prediction or forecast of what will occur by the end of the time frame. Use real company data, not norms or averages, unless you want normative or average results. Basics that are usually included in returns are how many new vs repeat customers are expected? What is their Annual Customer Value? If there is a digital component, what are visits and conversions rates to the website? If a company transformation is expected, operating costs in other areas that will decline as new capability are built can be a factor. There can be a few to many input. Confidence in the data means reliability in the return.

STEP #5: IDENTIFY THE INVESTMENTS

In some cases, this is self-evident. But not always. Let’s say a major investment in infrastructure is occurring that will take a couple of years but the ROI time frame is one year. The investment is based on cash flow and what is spent in that year.

STEP #6: CALCULATE THE ROI

The ROI formula is: Return – Investment/Investment X 100%. The ROI is expressed as a percent. That’s it. Here is the formula and a sample calculation.

STEP #7: GUIDE WITH KPIs

An ROI is a forecast of a result to occur in the future, a scorecard of key metrics is developed to keep ROI on track. These are Key Performance Indicators or KPIs.  A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. To keep the ROI on track, KPIs are an actionable scorecard. Variables that figure into the return like returning customers, new customers, annual customer value and conversion rate might also be KPIs. Here is what a KPI scorecard looks like for a new digital marketing venture.

STEP #8: ALIGN WITH DESIRED GOALS

ROI is key to evaluating how realistic is the business objective and financial goals for a company. In the ROI calculation above of 238%, the company is expecting a return of $2.38 for every dollar invested. The company has to decide how if realistic this is. It is if the company has the commitment and deliver on their plan and measure success. It probably isn’t if they don’t. But now they have a basis for evaluation. Otherwise, the company is just guessing.

Do these steps to calculate ROI sound simple and sensible to you? Do you need help figuring out ROI at your company?

• 86 percent of B2B companies say they are doing content marketing
• Just 38 percent say it is effective
• 21 perecnt are able to track a return on investment (ROI) (source: Content Marketing Institute)

Benefits from marketing and attribution of results always seem harder for B2B companies than B2C. Maybe it’s because the buying cycle takes longer, more people are involved in purchase decisions and sales are made for rational, not emotional, reasons.

Is it harder or are we not looking hard enough?

If you need convincing, here are 33 inspiring B2B digital marketing case studies.

CONTENT MARKETING

1. ADP: Developed a content marketing campaign to connect and engage with their target audience on a ADP solution using white papers and a diagnostic assessment tool. The campaign generated over $1 million in new sales opportunities with several deals closed within the first 3 months of launch.
2. CROWE HORWATH: the public accounting firm used 48 pieces of content in 4 different topic areas, this campaign targeted C-level prospects in financial institutions with $1 billion or more in assets across the buying cycle. Content tactics included: executive briefs, case studies, infographics, checklists, Q and A, and Brainshark video. 778 contacts were engaged with a 70% open rate (vs. 10%), 2 engagement worth $250k in revenue.
3. DEMANDBASE: A B2B marketing cloud, helped B2B marketers make the right content technology investment by using a white paper, infographic, webinar, Slideshare and a live presentation to spotlight tools that can maximize the power of content. The results of the campaign generated 1,700 leads, 125 webinar participants, 5,000 views on Slideshare and $1 million in new business.
4. FISHER TANK: Makes giant, above-ground welded steel tanks. With clients in the fuel industries, waste water, pulp & paper and other industrial and municipal areas, projects tend to be big (multi-million dollar) and take a long time to sell (12 months and longer). For more than 60 years, the company has made its sales primarily through cold calling and referrals from existing clients. So it took some moxy to launch a content marketing strategy online. The plan including sprucing up the website, integrating a blog and social sharing, and offering some valuable content by free download. The campaign increased web traffic by 119%, traffic from social media by 4800%, lead conversions by 3900%, quote requests by 500% and new qualified sales opportunities by $3.4 million.
5. LOGICALL: A company that focuses on inbound and outbound customer management solutions, uses content assets such as emails, microsite and ebook, Logicalis developed a thought leadership effort that supported sales teams by enabling custom messaging based on the prospects interaction with the campaign. With a target audience of about 2,000, nearly $8 million in new pipeline business was closed.
6. OPENTEXT: A software solution for enterprise information management, created a personalized new customer onboarding site offering a variety of assets (white papers, checklists, product pages, ebooks, case studies) and content to welcome new clients and provide upsell, cross-sell opportunities. The campaign also included a two phase nurturing program. 1,700 new contacts were identified along with 31 new opportunities worth $1.8 million.
7. OPTUM: A health services business, created an integrated marketing campaign to support the launch of a new solution, support sales and build thought leadership. The content marketing mix included: advertorials, display ads, email, direct mail and a campaign website. The successful campaign earned a 23.5 lead to conversion rate, 475% increase in website traffic, 2,500+ resource downloads, 28% increase in YoY blog followers and $52 million in contract value of new business with less than $ 1,000,000 invested.
8. RS COMPONENTS: The electronic product distribution company created a specific social hub, spanning four different languages, having the purpose of being a collaboration and engagement hub for Electronic Design Engineering. One of the centrepieces of the site is the free tool store, which includes a free design tool that’s been downloaded more than 60,000 times and the site itself gathered more than 45,000 members within its first 12-month period.
9. SAP: The global strategy was aimed at enabling cross-cultural information to be efficiently shared around the company. SAP Latin AmericaOne year after implementing this strategy SAP Latin America had more than 100,000 fans and followers (an increase of 900%) and achieved a 17% interaction rate across  the region, while a campaign featuring a social app targeting specific buying centers drove more than 12,000 visitors and a 15% engagement rate. has four Facebook pages, four Twitter feeds and two LinkedIn accounts. These profiles are split out by language (e.g. Portuguese and Spanish) rather than country and aim at achieving a split of 20% promotion material vs. 80% of interesting, engaging content for its community.
10. XEROX: Created a targeted “Get Optimistic” campaign to connect with 30 top accounts and partnered with Forbes to create a magazine that offered relevant business tips. 70% of targeted companies interacted with the microsite, readership increased 300-400% over previous email campaigns, added 20,000 new contacts, generated 1,000+ scheduled appointments, and get this: yielded $1.3 BILLION in pipeline revenue.

SOCIAL MEDIA

1. CISCO: Established a social media listening center. It listens to more than 5000 social mentions a day on Facebook, Twitter, and other social channels. Cisco has been able to control outside agency fees, avoid other customer and partner interaction costs, increase team productivity, and identify new sales opportunities. The social media listening center has had an ROI of +281% in 5 months to generate an annual benefits of $1,596,292.
2. MAERSK: Danish shipping company Maersk first began using social back in 2011 to raise brand awareness, gain insight into the market, increase employee satisfaction and get closer to its customers, It focuses on the stories that emerge from within the business, such as how it is helping fuel a boom in the sale of Kenyan avocados and where its staff come from. Its presence on each network is tailored to that platform, so for example on LinkedIn it promotes job vacancies and publishes articles about the work culture within the business, while on Instagram it encourages followers to post photos of its ships using the hashtag #Maersk. Maersk now has more than 1.5m Facebook fans (of which around 15% are customers) and 12,000 Twitter followers, as well as active accounts on Instagram, Tumblr, YouTube and Google+.
3. DELL sought to go where its customers are — on social media — by offering technical support, responding to customer concerns and building business digitally. The company launched @DellCares, a program that uses social media platforms and online communities to address customer questions and reply directly to customers through tweets and other response methods. According to Amy Marquez Bivin, Social Media Outreach Manager, 98 percent of customer issues responded to through @DellCares are resolved without customers needing to work with an agent and 85 percent of social-media-assisted customers with negative initial opinions of Dell reported a positive opinion following the support experience. The program is also generating an average of $265,000 in additional weekly revenue.
4. SHIPSERV: It’s difficult to imagine the maritime industry getting to grips with social media, but Shipserv one of the leading industry marketplaces, proves that in can be done very successfully. As part of a wider marketing strategy and customer engagement strategy, various social approaches were taken, resulting in greater site traffic, alongside increased brand awareness and lead opportunities. From an initial $30,000 social media marketing investment, it’s estimated the overall results achieved would have cost more than $150,000 through traditional media.

SOCIAL CRM

1. ALLINA HEALTH: Used CRM to manage its data warehouse. It’s identified benefits that include reduced patient length of stay, reduced admissions, and improved health outcomes in stroke, depression, and angioplasty treatments. Within 2 years, the CRM initiative had an ROI of +152% and generated $1,052,828 each year.
2. GET SATISFACTION: A leading online customer community platform that companies use or customer support, idea submission, marketing and sales questions, and capturing positive feedback, focused traffic driving strategies on search, social media, blogging, and building a content community. The CRM strategy achieved an ROI of +104% in month one, +168% in month two and +248% in month three.
3. TYROIT: is Europe’s largest manufacturer of bonded grinding, cutting-off, sawing, and drilling tools generating $416 million in annual revenue from more than 70,000 unique products produced in 19 plants for 60 countries. Tyroit used CRM to integrate products and solutions to reduce the number of contact points and transaction costs. It increased bottom line costs by +25% and produced an ROI of +183% within 2 years.

SOCIAL SELLING

1. AT&T:  Put together a new sales team to re-build business relationships with a Fortune 100 company in Atlanta. They decided to take an entirely new approach that heavily favored building relationships through social media. They had to try something new.  Relationships with a key client had suffered in the past five years, creating strain and sales had dried up. With training from Mark Schaeferand support from our internal team, they began implementing a content strategy aimed at strategic “persons of interest” from the former customer. Inside of 18 months $47 million in brand new business was awarded to AT&T, directly attributable to social media outreach.
2. IBM: Traditional ways of finding B2B customers for hardware and software products – telemarketing and email – were not producing the same results when applied to selling web-based services such as cloud computing and data security. IBM launched a program called “intelligent listening” within social media to learn what conversations about cloud computing were going on, what trends and issues were being discussed, and what the hot-button topics in the field were for users. Sales reps could simply check an RSS feed, find some content that fit the context of any discussion they were seeing, and upload them to social media and also to their new individual rep profile pages within the IBM site. The result was 10 orders the first day, and orders for product during the quarter that were 4X higher than during the same time the year before.
3. INCONTACT: A call center software company, trained half their team to learn and engage with customers through Social Selling using LinkedIn and the marketing automation software, Eloqua. Within a year, the half of the team that was trained saw a 122% increase in revenue for those sales reps using LinkedIn; 157% increase in revenue for those sales reps using LinkedIn & Eloqua. Now the entire company is trained in Social Selling Here is a brief video to explain the story.
4. INDIUM:  Social Media in manufacturing is a rarity. Several of their engineers (17 or so, and 73 blogs.) write blog articles to share their expertise with customers, prospects and people with questions about the technical applications related to solder. They shifted from traditional white papers to blog articles, supported by extensive measurements. Video is part of the mix too, to develop high value conversations, and this rolls over into trade show attendance. The video highlights key points for success and insights. SEO improved significantly. Leads increased significantly while trade-show costs decreased 75%.
5. HUBSPOT: Focused social media on solving customers’ problems as a way to earn leads. For example, HubSpot is first to release guidebooks their target market needs to create success. When something changes in online marketing, HubSpot is there with a guide to manage the change. They share the best advice, fast and have earned a reputation as THE educational resource for the market they serve. They give knowledge and advice (content) away free and make sure it’s the very best stuff possible. This (now) famous software start-up exploded onto the scene in 2006. Two years later they hit $2.2 million in sales and $52 million 4 years later.
6. LINKEDIN:  Had to be converted to social selling. After the release of tools such as Sales Navigator and TeamLink, LinkedIn’s own sales team began seeing significant results. Ralf VonSosen, the company’s head of marketing for sales solutions notes, “We started seeing a 50% increase in leads to meeting conversion rates.”
7. LOGMYCALLS: A call tracking service, practiced a“150 Blog Posts in 50 Days” effort. “With a company our size, the commitment has to be significant in order to produce 3 unique and useful blog posts a day,” says Inbound Marketing Manager, McKay Allen. “After all, we also produce 2 original marketing webinars each week, monthly case studies, a variety of marketing White Papers, and some humorous and awesome marketing call tracking videos.” The result of this original and relevant content: A 400% increase in leads within 90 days.

LINKEDIN MARKETING

1. AXWAY: Is a software service that manages, runs, secures, and monitors all your business interactions – emails, files, messages, services, events, and processes. Although Google Adwords was successful at generating leads for Axway, competition for top keywords was fierce and drove up conversion costs. Axway used LinkedIn Ads specifically targeting the job titles, industries and job functions. They tested over 30 ads with custom landing pages. The LinkedIn campaigns generated +25% conversion rate with the lowest cost per conversion ever achieved.
2. JMF INTERNATIONAL TRADE GROUP: Is a business consultancy and contract manufacturer run by James Filbird. What Jim did is something any of us could do to grow a business but most of us don’t. He: 1) kept his profile up-to-date, 2) joined 50 LinkedIn Groups, 3) scoured Group Digests, 4) engaged in discussions, 5) connected, 6) moved the conversation offline, mostly through Skype and 7) re-evaluated his groups and contacts, regularly. He attributes the company he built to $5,000,000 in revenue largely to LinkedIn.
3. GOSHIDO: a software solution that makes is easier for people around the world to work together and collaborated, used LinkedIn to find seed capital for its own creation.  This was done by identifying and leveraging connections who could be potential investors. Approximately $150,000 was raised.
4. HEWLETT PACKARD: is the first company to hit 1,000,000 Followers for a Company Page. They also set up a specific Discussion Group to attract small businesses that has 5,500+ members; 75% who actively engage in discussions and who are 2X more likely to recommend HP. Since a video tell more than 1,000 words, here’s the story.

WEBINARS

1. INSPIRED MARKETING: Sells digital materials and online training programs about using social networking tools such as LinkedIn, Facebook and Twitter to create and market a successful business. In 2010, the partners presented more than 300 webinars (both their own and through other people). They investment could be tracked to over $2.5 million in sales for 2011. “In January 2011, we had sales of $250,000 from just seven GoToWebinar events,” says President and Co-founder, Lewis Howes.
2. LUMEDX: Is a small healthcare technology company with 100 person staff. It needed to stand out in the face of large brand competition. Lumedx used webinars to cost effectively build awareness of its cardiovascular information and imaging systems product, drive lead generation campaigns and build customer rapport. Lumeds increased contact with over 500 clients, gained competitive edge over much larger companies and drove over$600,000 in annual sales.
3. MARKETO: Is a leading provider of marketing analytics software. The company recognized webinars as a key piece in the marketing tool kit to promote thought leadership and generate leads. As with many webinars, people registered but didn’t always attend. They used a simple, recorded phone message reminder in addition to email. Although th ephone reminder added $2 for every registrant, it increased conversion of people who attended  from 26% to 48% and, according to Marketo, was well worth the investment in terms of sales results according to a company rep.
4. PINPOINTE: Is  a provider of on-demand email marketing automation services for mid-market and large enterprises. Pinpointe depended upon free,15-day trials of its service together with traditional sales outreach to generate leads and win new customers. However, the company wanted to find additional ways to increase awareness, leads and sales. When webinars were added, 1000 new leads per month are added; 25 become customers who each generate $200/month in Pinpointe services adding $6,250 and $75,000 to the bottom line.
5. SEAGATE: Is a large 52000+ staff technology company, Seagate wanted to bypass traditional B2B channels and market its new product directly to end users. Webinars facilitated a B2C product launch and attracted 1500+ attendees with zero advertising budget. Seagate also used webinars to assemble far-flung speakers for webcasts without travel costs. Seagate exceeded initial sales unit goal by 300 percent, doubling sales forecast within one week of launch. Once they put the webcast on YouTube, a viral marketing effect created 38,800 within 4 months.

This post was originally featured on the {grow} blog from Mark Schaefer’s Businesses Grow. We’re grateful for the significant exposure it received. We’re republishing for our readers.

Did you find one relevant to your business? Did these B2B digital marketing case studies convince digital marketing can work for your B2B business?

• 5% increase in customer retention increases profits by 25% to 95% (Harvard Business Review)
• 6-7x more costly to acquire a new customer than retain a current one (Bain & Co.)
• Just 42% of companies are able to measure Customer Lifetime Value (Econsultancy)

There are many reason why customer retention is important. Perhaps most important is the value of retained customers over time.

Customer Lifetime Value is the dollar value of a customer relationship based on the present value of the projected future cash flows from the relationship.

It pays to calculate Customer Lifetime Value. It’s one of the most important metrics for a business.

To show why, here are 12 big business benefits of Customer Lifetime Value.

1. LARGEST BUSINESS ASSET: Customer Lifetime Value provides an exact figure for the company’s largest asset. The calculations enables you to follow the progress over time and to intervene if events start moving in the wrong direction.
2. CUSTOMER SEGMENTATION: Customer Lifetime Value enables your business to classify different customer groups and different potential customer groups by long term profitability. So you can decide whether it’s worth it to change market strategy or not.
3. EARLY WARNING SIGNS: Customer Lifetime Value can be used as an early warning system to detect defection rates. It identifies in which segments the problem originates so actions can be taken to correct the cause.
4. COMPLAINT MANAGEMENT: If a customer complains about a serious problem, Customer Lifetime Value can help front-line employees decide what action to take immediately and how much to invest to solve the problem.
5. WIN-BACK CUSTOMERS: A customer that a company wins back has a different Customer Lifetime Value before and after recovery (win-back). Often, second CLV is better than the first CLV.
6. UP-SELL AND CROSS-SELL: Two fundamental tactics in any marketing program are to up-sell and cross-sell. But which one should to do? When? And to what segment? Customer Lifetime Value can give you a good idea of the return to expect to guide decisions and investments on up-sell and cross-sell.
7. AUTOMATE INTERNAL PROCESSES: Ask a company what keeps them from maintaining better customer relationships, and their response will probably include something along the lines of “we don’t have enough time,” or “we’re too busy with daily tasks and processes.” Knowing Customer Lifetime Value can help a company determine if investments into Marketing Automation software are worthwhile.
8. BRAND LOYALTY: Products and services may be easy for competitors to copy, but a company that is good at creating customer loyalty is less vulnerable to attacks from competitors. Loyalty is much more difficult to copy.
9. BALANCE SHORT TERM RESULTS AND LONG-TERM GOALS: Customer Lifetime Value enables better decision making when having to weigh the competing needs of short-term profitability and longer term goals.
10. QUANTIFY CUSTOMER SATISFACTION: Many businesses rely on a customer satisfaction scores to guide interactions and explain business results. Customer Lifetime Value puts an amount to the increase or decrease the customer satisfaction scores represents.
11. LEAD GENERATION: Most CMOs really don’t know and even fewer CEOs know “what’s a lead worth”? When you know Customer Lifetime Value, you understand your lead-to-customer conversion rate and exactly how much a lead is worth. And how much you should be willing to spend on new leads.
12. RETURN ON INVESTMENT (ROI): Any company has only limited resources. It is natural to want to use them for customers that bring them maximum profits. If you know the cumulative cash flow a particular customer, Customer Lifetime Value helps determine how much should go into retaining a customer to maximize ROI.

These benefits show just how valuable the calculation of Customer Lifetime Value can be. But, in the end, it is a calculation. To put the business building benefits of Customer Lifetime Value to work, people have to take action.

Do these benefits prove the value of Customer Lifetime Value to you. How would you put Customer Lifetime Value to work on your business? Does your company help calculating Customer Lifetime Value?