How to Calculate ROI on Marketing Campaigns (5-Step Guide)

Are you spending thousands on ads, SEO, or social media without knowing your returns? 31% of business owners can’t confidently say which marketing channels drive real revenue.

The result? Wasted budgets, unpredictable pipelines, and missed growth targets.

After 16+ years helping businesses grow, I’ve found that tracking your marketing ROI (return on investment) reveals exactly which strategies fuel real, measurable growth. One example? My agency helped Alliance Moving & Storage, a family-owned moving company in Chicago, revamp their website and roll out a full SEO strategy that delivered a massive 1,253% ROI.

Bottom line: When you know what works, scaling is simple.

In this guide, I’ll explain how to calculate marketing ROI, which can help you make smarter, more profitable marketing decisions.

Let's Break It Down... What Is Marketing ROI?

Marketing ROI tells you one simple thing:

Did the money you spent on marketing bring in more money? Or did it just look good in a monthly report while quietly tanking your margins?

Here’s the basic formula I use when measuring marketing ROI:

Marketing ROI = (Revenue – Marketing Costs) / Marketing Costs x 100

So let’s say you spent $10,000 on a Google Ads campaign and brought in $40,000 in revenue. That’s a 300% ROI.

Why Sales Performance Matters

What a lot of people miss: ROI doesn’t stop at the marketing team. It’s directly tied to how well your sales team performs, too.

Let’s say your marketing campaign brings in 100 leads — sounds great, right? But if your sales team only closes 3 of them, that’s just a 3% close rate. Suddenly, what looked like a high-performing campaign now has a weak ROI.

This isn’t just theory — I see it all the time in industries like healthcare, where a single new patient can represent thousands in long-term value. But that value only materializes if the team is ready to convert that lead into a real appointment.

That’s why I don’t just look at lead volume. I always track cost-per-booked-job, close rate, and average order value. Because at the end of the day, your marketing investment should be measured by what closes, not just what gets clicks.

5 Key Metrics to Calculate Your Marketing ROI

To achieve a good marketing ROI, you need to measure more than top-line revenue.

Each of the metrics below offers a different lens into your marketing performance — together, they give you a full picture of what’s working, what’s wasting money, and where to double down.

1. Conversions and Conversion Rate

A conversion could be anything meaningful — a quote request, form fill, purchase, or even a newsletter sign-up. Whatever it is, you need to track it.

Conversion Rate = (Number of Conversions ÷ Total Visitors) × 100

It’s one of the clearest signals of how well your marketing and website are actually working.

Example: Let’s say 1,000 people visit your site and 50 request a free consultation — that’s a 5% conversion rate. Not bad at all.

For most service-based businesses, I aim for at least a 3–5% conversion rate. If it’s lower, there’s usually a problem with your offer, targeting, or user experience, and that’s what you need to fix first.

2. Cost Per Lead (CPL)

Your cost per lead shows how much you’re spending to generate each potential customer.

Cost Per Lead (CPL) = Total Marketing Spend ÷ Number of Leads Generated

Simple, but super revealing.

Example: If you spend $3,000 on Facebook ads in a month and get 60 leads, your CPL is $50.

I use CPL to compare the performance of different channels, like SEO vs. Google Ads, or Meta vs. email. One platform might bring in cheaper leads, but that doesn’t always mean better leads (which is why we look at quality metrics, too).

For most home services and local businesses, I usually aim for a CPL between $30 and $100, depending on the industry. If it’s way above that, we may have a targeting or funnel issue.

3. Customer Lifetime Value (CLV)

CLV is one of my favorite metrics because it shifts the focus from one sale to what a customer is worth over time. That includes repeat purchases, upsells, referrals — anything that comes from keeping them happy and coming back.

CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan

Example: If your average client spends $500 per visit, comes back twice a year, and sticks around for 5 years, their CLV is $5,000.

Once you know your CLV, you can work backward and set a smart acquisition budget. If a customer is worth $5,000 long-term, spending $300 to acquire them makes perfect sense. But if you’re paying $500 to land a $200 one-time job? That’s a red flag.

4. Customer Acquisition Cost (CAC)

CAC reveals what you’re really spending to turn a lead into a paying customer.

This metric includes everything you spend on marketing and sales, such as ads, sales rep salaries, and lead nurturing costs, but excludes operational overhead (like office rent or utilities).

CAC = Total Marketing and Sales Spend / Total New Customers

Example: Let’s say you spend $7,000 on ads and $3,000 on your sales team's salaries in a month. If you land 100 customers during that time, your CAC is $100 per customer.

By knowing your CAC, you can see if your marketing efforts are cost-effective and adjust your budget accordingly. If your CAC is high but your CLV is low, you’ve got some work to do on improving customer retention or acquisition efficiency.

5. Return on Ad Spend (ROAS)

ROAS is one of my go-to metrics to see whether my paid campaigns generate revenue that exceeds the investment. It tells you exactly how much return you’re getting for every ad dollar spent.

ROAS = Revenue from Ads ÷ Cost of Ads

Example: If you spend $1,000 on Google Ads and bring in $4,000 in sales, your ROAS is 4x — meaning you earned $4 for every $1 spent.

As a general rule, I consider 4:1 ROAS (4x) to be a solid goal in most industries. But this benchmark can shift depending on your margins. A high-ticket business might thrive with a 2x ROAS, while an e-commerce brand might need 5x or more to stay profitable.

ROAS gives you fast feedback so you can optimize in real time, but remember, it’s just part of the story. For big-picture decisions, I always pair it with CAC and CLV to make sure short-term wins don’t hide long-term losses.

Want to dive deeper into paid ads ROI? Check out my guide: How to Calculate PPC ROI and Maximize Every Click →

Ready to Discover Your ROI Potential?

If you’re not 100% sure which campaigns are driving revenue, that’s a problem. I’ll show you what’s profitable, what’s not, and how to boost your marketing ROI.

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5 Proven Steps to Measure Your Marketing ROI

Measuring ROI isn’t just a math exercise — it’s a roadmap to smarter, more profitable decisions. Each of these steps helps you track what matters and ties your marketing dollars to real business results.

1. Define Your Marketing Goals

Before you launch any campaign, ask yourself the most important question: What does success look like?

Too often, businesses chase vague metrics — like “more traffic” or “better engagement.” But if you want to improve your ROI, your goals need to be tied to real business outcomes: revenue, lead volume, customer acquisition cost, or conversion rates.

The best way to do this is by setting SMART goals — goals that are Specific, Measurable, Achievable, Relevant, and Time-bound.

Example SMART Goal: Generate 200 qualified leads in 90 days through SEO and paid search, with a target of closing $1M in new revenue and improving landing page conversion rates by 30%.

Without a goal like this, ROI is impossible to measure because you don’t know what you’re aiming for.

2. Determine Marketing Investments

Don't just pick a number at random. Set the right marketing budget by aligning it to your business stage and growth goals. Here’s a quick rule of thumb I use with clients:

• 5% of revenue if you’re an established business aiming for steady, predictable growth
• 10% if you’re pushing for moderate expansion or looking to increase market share
• 15–20%+ if you’re a startup or going all-in on aggressive scaling

And don’t forget to factor in everything that fuels your marketing. That includes:

• Content creation
• Software tools (like your CRM or email platform)
• Paid media
• Internal team salaries or outside agency/vendor fees

Your ROI is only accurate if your marketing cost is too.

3. Map Your Sales Funnel

Marketing ROI lives and dies in your sales funnel.

Outline how leads flow from awareness to purchase. Where do they drop off? Where do they convert? The more visibility you have, the more accurately you can connect campaign performance to sales growth.

Knowing your funnel helps you track cost-per-booked-job, close rates, and where to optimize first.

4. Understand Your Cost Per Lead (CPL)

As I mentioned before, you can’t calculate ROI without knowing what a lead costs and what they’re worth.

CPL = Total Marketing Spend ÷ Number of Leads

Example: Spend $5,000 and get 25 leads → your CPL is $200

If only 5 of those leads become clients, your cost per client is actually $1,000 — which changes everything. Always factor in lead quality, not just volume.

5. Calculate ROI Using This Basic Formula

This also bears repeating: Once you’ve tracked your costs and revenue, it’s time to do the math. Like I said, this is the formula I walk every client through:

(Revenue – Marketing Costs) / Marketing Costs × 100 = ROI%

Example: Let’s say your campaign brings in $50,000 in revenue and costs $10,000 to run. ROI = ($50,000 – $10,000) ÷ $10,000 × 100 = 400%

At my marketing company, Comrade, we typically aim for a 400%+ marketing ROI annually across campaigns. Of course, that target depends on your industry, your budget, and how mature your marketing strategy is.

This is especially important in industries with longer sales cycles (like law firms), where true ROI comes from connecting marketing efforts to signed cases.

If you're a law firm owner, I recommend checking out how to track ROI by practice area to cut wasted spend.

And lastly, don’t judge ROI too early. New campaigns need time to test, optimize, and build traction. Give it at least 6–12 months to get a clear picture of what’s really working.

Pitfalls to Avoid When Calculating Marketing ROI

Even the best ROI formula won’t help if you’re making mistakes behind the scenes. Before you scale your strategy, make sure you’re not falling into one of these common ROI-killing traps.

1. Vendor Obscurity

Be wary of agencies or freelancers who only show you surface-level activity, like posts published or keyword rankings. That’s not performance; it’s busywork. If they can’t clearly connect their work to leads, sales, or revenue, they’re not managing ROI — they’re managing optics.

2. Unrealistic Expectations

ROI doesn’t show up overnight. Early-stage marketing involves setup, testing, and plenty of fine-tuning. Expecting a positive return on Day 1 is like planting seeds and getting mad they’re not fruit by lunchtime.

True ROI takes 6–12 months of consistent execution, optimization, and patience.

3. Sales & Marketing Misalignment

Even the best marketing campaigns fall flat without a solid sales process behind them. If leads aren’t followed up within minutes, or if intake staff isn’t trained to close, your ROI will tank. I’ve seen too many marketing campaigns blamed for what’s really a sales issue.

4. Neglecting the Full Funnel

ROI isn’t just about getting traffic or leads — it’s about what happens after the click. If your ads are solid but your landing page doesn’t convert, or if leads convert but churn quickly, your ROI will suffer.

To fix your ROI, figure out which stage of your funnel is leaking: traffic, conversions, sales, or retention.

Want to Hit a 400%+ ROI?

Schedule a free audit with my team — we’ll break down your numbers, spot your revenue leaks, and show you exactly where your ROI can grow.

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Final Takeaway: Make Your Marketing Pay You Back

If there’s one thing I’ve learned, it’s this: Don’t solely focus on what you’re spending. Focus on what you’re getting back.

At Comrade Digital Marketing, all our digital marketing campaigns are backed by a Client Portal that gives you full visibility into your ROI, along with smart lead tracking and transparent reporting from day one.

Our clients see a very positive marketing ROI, including Lewis CPA, an accounting firm that came to us relying solely on word of mouth. After a digital marketing revamp, they saw an 831% marketing ROI — proof that even the most traditional businesses can unlock serious growth with the right strategy.

Ready to see what's possible with your marketing ROI? Schedule a free consultation today.