Minute Read 5

 

Are you spending money on marketing but have no idea if it’s working?

You’re not alone.

Most business owners we talk to can’t answer this simple question: “Is your marketing making you money?”

If you don’t know the answer, you’re flying blind. And that’s scary.

In this guide, I’ll show you exactly how to track your marketing ROI. No complicated math. No confusing terms. Just simple steps you can use today.

What is Marketing ROI?

ROI stands for “Return on Investment.”

In simple terms: Are you getting more money back than you’re spending?

If you spend R10,000 on ads and make R30,000 in sales, that’s a good ROI.

If you spend R10,000 and make R5,000, that’s bad.

Pretty simple, right?

Why Most Businesses Don’t Track ROI

When I started researching this topic, I was shocked.

There’s almost no good information out there about tracking marketing ROI properly.

Most business owners are:

• Guessing if their marketing works
• Making decisions based on feelings
• Afraid to spend more (even when they should)
• Wasting money on ads that don’t work

Sound familiar?

What Happens When You Don’t Track ROI

Let me paint a picture.

You’re spending R20,000 per month on Facebook ads. Sometimes you get customers. Sometimes you don’t.

You have no clue if it’s working.

So what do you do?

• Keep spending and hope for the best? ❌
• Cut the budget and maybe lose sales? ❌
• Increase spending and risk losing more money? ❌

You’re stuck.

Without tracking, you can’t:

• Make smart decisions
• Scale your business
• Know what’s working
• Hold your marketing team accountable
• Sleep well at night

The Benefits of Tracking Marketing ROI

When you track your ROI properly, everything changes.

You can: ✅ Make calm decisions (not emotional ones) ✅ Know exactly what to scale and what to cut ✅ Hold your marketing partners accountable ✅ Forecast your revenue ✅ Grow without fear

You’re in control.

About Me (And Why You Should Listen)

Hi, I’m Kyle Farah.

I run Future Famous, a digital marketing agency in South Africa.

Since 2018, we’ve:

• Generated over R250 million in tracked revenue
• Worked with 125+ brands
• Created 5 million+ leads
• Managed R2 million+ in monthly ad spend

We track everything. And now I’m sharing our system with you.

The 2 Big Questions Your ROI Should Answer

Your marketing ROI needs to answer two questions:

Question 1: Is this campaign working RIGHT NOW?

Question 2: Can I grow my business this way long-term?

Most people only look at question 1. That’s a mistake.

You need both answers.

Short Term ROI: The 3 Levels

Let me show you the three ways to measure ROI in the short term.

Level 1: Money In vs Money Out

This is the simplest way to track ROI.

Formula: Revenue ÷ Ad Spend

Example:

• You spend R10,000 on ads
• You make R100,000 in sales
• ROI = R100,000 ÷ R10,000 = 10x

Easy, right?

What this tells you: Is your campaign generating revenue?

The problem: It doesn’t show if you’re actually making profit.

Level 2: Gross Profit ROI

This is better than Level 1.

Formula: Gross Profit ÷ Ad Spend

Example:

• You sell a R100,000 service
• Your gross profit is 70% (R70,000)
• You spent R10,000 on ads
• ROI = R70,000 ÷ R10,000 = 7x

What this tells you: How much profit (not just revenue) your marketing generates.

Level 3: Net Profit ROI

This is the most accurate way to measure short-term ROI.

Formula: Net Profit ÷ Ad Spend

Example:

• You sell a R100,000 service
• Your net profit is 15% (R15,000)
• You spent R10,000 on ads
• ROI = R15,000 ÷ R10,000 = 1.5x

What this tells you: Is your marketing actually profitable after ALL costs?

Important: This answers Question 1 (Is it working now?)

But we still need to answer Question 2…

Long Term Growth: LTV and CAC

To know if you can grow long-term, you need two numbers:

1. LTV (Lifetime Value)
2. CAC (Customer Acquisition Cost)

These are the most important numbers in your business.

What is LTV (Lifetime Value)?

LTV is how much money one customer brings you over their lifetime.

Not just their first purchase. ALL their purchases over 3 years.

Formula: Total Revenue ÷ Total Customers

Example:

• You have 100 customers
• They spent R1,000,000 total over 3 years
• LTV = R1,000,000 ÷ 100 = R10,000 per customer

What is CAC (Customer Acquisition Cost)?

CAC is how much it costs to get one new customer.

Formula: Total Marketing Costs ÷ Number of New Customers

Example:

• You spent R100,000 on marketing
• You got 50 new customers
• CAC = R100,000 ÷ 50 = R2,000 per customer

The Golden Ratio: LTV:CAC

Now here’s the magic.

You take your LTV and divide it by your CAC.

Formula: LTV ÷ CAC

Example:

• LTV = R10,000
• CAC = R2,000
• Ratio = R10,000 ÷ R2,000 = 5:1

What does this mean?

For every R1 you spend to get a customer, they give you R5 back.

That’s good!

What’s a Good LTV:CAC Ratio?

The magic number is 3:1.

Here’s what different ratios mean:

Below 3:1 = You’re spending too much on marketing ❌

3:1 = Perfect! Your marketing is working ✅

4:1 to 5:1 = Great! You should probably spend MORE ✅✅

Above 6:1 = You’re leaving money on the table. Spend more! 💰

The Golden Rule (Thanks Alex Hormozi!)

Different business types need different parts working:

If you have all three working (Marketing + Sales + Operations):

• Target: 3:1 ratio ✅

If only Marketing and Sales are working:

• You can handle 6:1 ratio ✅

If only Marketing and Operations are working:

• You can handle 9:1 ratio ✅

If only Operations is working:

• You need 12:1+ ratio to survive ⚠️

The better your business runs, the less you need from each customer.

Are You Spending Too Much or Too Little?

This is about marketing efficiency.

Most businesses are doing one of these:

1. Spending too much (losing money)
2. Spending too little (leaving money on the table)
3. Spending just right (rare)

Your LTV:CAC ratio tells you which one you are.

If your ratio is 3:1 = Keep doing what you’re doing

If your ratio is 6:1+ = You should spend MORE on marketing

If your ratio is below 3:1 = You need to cut spending OR fix your business

Your Next Steps

Here’s what to do right now:

Step 1: Calculate your short-term ROI (use Level 3 if you can)

Step 2: Calculate your LTV

Step 3: Calculate your CAC

Step 4: Work out your LTV:CAC ratio

Step 5: Decide if you should spend more or less on marketing

Get Your Free ROI Tracking Spreadsheet

I’ve created a simple spreadsheet that does all the math for you.

It’s the same one we use for our clients.

[Download it here – link in the video description]

Just plug in your numbers and it tells you:

• Your ROI at all 3 levels
• Your LTV
• Your CAC
• Your LTV:CAC ratio
• If you should scale or cut spending

Final Thoughts

Tracking marketing ROI isn’t complicated.

You just need the right formulas.

Remember:

• Short term: Use the 3 levels of ROI
• Long term: Track your LTV:CAC ratio
• Golden number: Aim for 3:1 or better

Once you start tracking, everything becomes clear.

No more guessing. No more fear. Just growth.

About Future Famous

We’re a digital marketing agency in Sandton, South Africa. Since 2018, we’ve helped 125+ businesses track and grow their marketing ROI using our LeadMachine system.

Want help with your marketing?

[Get in touch here]