Calculating your payback from automating marketing with Mindbox

18 Nov ‘19

After a few painful separations with clients, which didn’t receive a positive payback from Mindbox, we understood how important it is to calculate ROI. Which is why we created a payback calculator in Google Spreadsheets. Now, at the start of any collaboration we calculate how much money a client will spend or earn through our system. The calculator tax into account the monthly Mindbox ROI from the following parts:

  1. We added revenue based on industry statistic, marginality, and monthly revenue.
  2. Savings: Mindbox reduction of service costs, which Mindbox replaces
  3. Savings: additional developer or marketing manpower hours on account of automation.
  4. Mindbox integration costs.

The calculator does not provide super exact numbers. But rather a forecast, which is enough to reach a decision. In this article, we will share with you how to utilize it.

If the calculation method seems too simple for you, we wrote another instruction. In it, we calculate the payback from improving marketing without our statistics.

The calculator
Our calculator is made in Google Spreadsheets. The yellow fields need to be filled out by the client: business-industry, monthly revenue, marginality, and developer cost. The white fields are filled out automatically.

Calculation sequence

Mindbox calculator calculates the payback of automating marketing based on a standard ROI formula:
(revenue – costs) / costs *100%.

We suggest to calculate profits from added revenue, marginality, and savings; and expenses – from the cost of the service. In reality, expenses include one-off costs on integrating the service – developer and marketer manpower. We don’t include this money in the formula on purpose, in order to speed up the calculation process and count the monthly ROI.

To calculate payback, the following steps are needed:

  1. Calculate the % of added revenue;
  2. Designate monthly revenue and marginality;
  3. Hour of a developers time;
  4. How much money you spend on services;
  5. Select a Mindbox module that you would like to connect.

Calculate added revenue

In our calculation, we use a median revenue value, which companies received after integrating Mindbox. These are calculations for the last 10 years:

  • Home and furniture goods — 6,2%
  • Jewelry— 13,5%
  • Clothes and footwear — 14,8%
  • Cosmetics — 20,9%
  • Children’s goods — 14,2%
  • Other industries — 11,9%

In the drop-down, select a relevant industry – the value of added revenue will automatically appear in the «Added revenue» field.

Relevant industry

If you have other added revenue figures on hand, input them into this field:

If you have other added revenue figures on hand, input them into this field

Designate monthly revenue and marginality

When you input your added revenue, enter your monthly revenue and marginality to calculate profit:

Initial data

Designate how much an hour of your developers time costs

There is a field for this in the calculator:

Developers  time costs

This data is needed in order to calculate your savings. If your developers stop helping your marketers after integrating Mindbox, and instead take on bigger development tasks, then it’s fair to attribute their costs to savings.

The developers cost is multiplied by 50, this is the average quantity of work hours per week which your developer spends on helping marketers: setting up triggers and manually segmenting your audience.

Enter the cost of developers hour including all taxes
Enter the cost of developers hour including all taxes.

If you know the exact quantity of hours spent per week — adjust the formula:

Adjust the formula

Designate how much money your marketing department spends on services

The total monthly cost of services that are being used by your marketers if Mindbox were to replace them functionality wise. Think – a mailing service:

The total monthly cost of services

Calculate costs

In our methodology, cost calculations are simplified, we only take direct expenses regarding Mindbox into account. Funds spend on marketers and developers on integrating their system are not included, since they are one-off.

Mindbox costs are put together from modules that you utilize in your direct marketing. There is a separate «Modules» tab for these costs. Here you may see these costs and relevant service descriptions.

Modules

For example, I want to send emails, SMS messages, and mobile pushes. I want newsletters to automatically send at times convenient for people. And also, I want it so that products which will definitely be liked by my customers to be easily addable to my newsletter. Then the tab with services will look kind of like this:

The tab with services

If you do not know which modules to select, then navigate over to the «Mechanics» tab:

Mechanics

To find the most suited mechanic for your business, sort the tab using the following filters:

  1. Industry.
  2. Module: newsletters, recommendations, loyalty program and so on.
  3. Client life cycle: newcomer, loyal/retention, churn.
  4. Interaction channel with clients: email, SMS, Viber and so on.

For example, I’m a marketer for an online pharmacy and want to automate email distribution. I plan on sending emails to new customers and those flowing out. To find the mechanics that fit me best, I first need to filter out the unneeded ones:

We filter mechanics

Conclusion and what to do with it

When you wrap up with the mechanics and services, return to the «Payback forecast» tab, the service cost will calculate automatically.

The calculation results are a revenue forecast. They represent how much money you will start earning, on average, three months after connecting Mindbox.

These numbers should be used during your meetings with management as an argument in favor of acquiring the service amongst other marketing instruments. For example, Mindbox ROI – 600%, ROI for increasing the budget for a media campaign – 700%. This means that you should first invest funds in advertising.

If you have no choice between instruments, and you surely want to purchase the service, pay attention to the ROI size: 0%, tells you that your investment and profit will be zero; >-% – invested funds will bring profits.

Payback forecast

Note: to understand if you should invest funds in Mindbox

  1. Open the Mindbox calculator, save a copy on your computer and go to the «Payback forecast» tab.
  2. Designate:
    • Industry,
    • Monthly revenue,
    • Marginality,
    • Hourly cost of a developer,
    • Costs of services that you currently use, if any.
  3. Go to the «Modules» tab and select those which you would like to connect.
  4. Return to the «Forecast» tab for your results.

These instructions were prepared by

Alexander Gornik

Alexander GornikCEO of Mindbox

Maria Vekshina

Maria VekshinaEditor

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