Stacking Growth | The B2B Marketing Podcast · Refine Labs

How to Calculate ROI

·37 min·3 clips

Dale explains why marketing has almost no impact on deal closure once sales takes over.

This episode of Stacking Growth features hosts Matt Schinella and Dale Harrison explaining a detailed method for calculating marketing ROI in B2B contexts. Dale Harrison, an expert in B2B marketing analytics, breaks down the components of a more accurate ROI model that accounts for timing and different marketing types. The discussion moves beyond simple revenue-to-cost ratios to address the real-world lag between marketing spend and revenue recognition. A core topic is the distinction between the Return (R) and Investment (I) in ROI, with a focus on the complexity of allocating marketing costs. The hosts explain that revenue is fixed at the point of a sale, but marketing costs are spread over time and rarely influence revenue in the same accounting period. They use the example of a business with a 90-day sales cycle, where marketing spend in one quarter influences revenue in the next. Dale argues that marketing has very little influence on deal closure rates or speed once a prospect enters the sales process, citing studies that show sales support marketing does not change close rates. The episode categorizes marketing expenses into performance marketing, focused on immediate leads, and brand marketing, which builds durable memory associations. A specific example involves running billboard campaigns for niche B2B research products, where brand-aware search traffic increased the very hour the billboards went live. The model must account for "latency to revenue," meaning marketing expenses from past periods must be matched to current revenue based on the average sales cycle length. A key insight is that brand marketing produces immediate results on in-market buyers while also creating a "long-tail" effect that decays over time as people forget. Dale presents a "memory decay" model, suggesting for high-consideration B2B goods, about 50% of people exposed to a brand ad forget it within 90 days. The calculation framework allocates 100% of last quarter's performance marketing cost to current revenue, but only a portion of brand marketing costs from several past quarters, using a decay curve. The final ROI calculation uses contribution margin, not just revenue, and factors in sales costs. Dale contrasts this method with "naive" ROI calculations from platforms like HubSpot, which can report inflated figures like a 12x ROI, whereas his holistic model typically yields a number three to four times smaller. He emphasizes that CFOs often instinctively distrust inflated marketing ROI numbers that don't align with overall business performance. The episode warns against calculating ROI for individual campaigns or deals, calling it a "bad idea" due to invisible influences like "dark social." The recommended approach is to calculate a holistic, defensible ROI for all marketing spend that can be credibly presented to finance leadership. The tone is educational and analytical, with Dale delivering a structured, lecture-style explanation filled with specific examples and numerical models. The style is conversational but dense with terminology from finance and marketing operations. This episode is ideal for B2B marketing leaders, operations managers, and finance professionals seeking a more credible framework for justifying marketing spend. Listeners looking for high-level strategic concepts or entertainment might find the detailed, number-heavy methodology too technical.

As heard by us

A practical reset for making marketing ROI more defensible.

Stacking Growth treats marketing ROI less as a simple scorecard and more as a question of timing, which fits its larger point about matching revenue to the period when spend actually had an effect.

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Why you'd press play

If your ROI math keeps flattering the wrong channel, start here.

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