ROI, or return on investment, is one of the best ways to measure the success of your marketing efforts. You might be asking, "What is ROI?" In short, it's a ratio between the overall cost of your investment and net profits. By measuring ROI, you can gauge whether an investment is worthwhile based on how profitable it is for your business. To determine if any aspect of your business is worth the investment, computing ROI is necessary.
Measuring ROI is also invaluable if you want to do more with your marketing. If you take the time to calculate your ROI for marketing, you are 1.6 times more likely to increase your budget for future marketing efforts. However, you need to set specific goals and match them to your efforts to measure and improve ROI effectively.
To help you with measuring and ultimately increasing ROI, take these steps to optimize your marketing campaigns.
Identify Your Key Goals
The goals you set will help you figure out what to measure when it comes to metrics. Otherwise, you won't know what to look for to measure your campaigns' success and profitability. You can set any number of goals for your business, which will dictate your marketing efforts and which methods you use to calculate ROI. Goals may include:
- Increasing brand awareness
- Increasing lead conversion
- Getting customers into the marketing funnel
- Increasing web traffic
- Increasing foot traffic to a location
- Increasing sales
- Growth on social media
Based on these goals, you can determine whether you'll look at metrics such as impressions, click-through rates, or other analytics. In turn, you'll be able to measure the success of your campaigns and optimize them accordingly.
Choose KPIs that Are Directly Related to Your Goals
After you've set some specific goals for your campaigns, you will need to decide on specific key performance indicators (KPIs) that help you determine whether you're meeting those goals. KPIs will be directly related to the goals you set. For instance, you might implement the following goals and campaigns, which would correspond with specific KPIs:
- Running an email marketing campaign — KPIs would include click-through rates, open rates, and bounce rates
- Increase in sales — You can calculate your ROI using the following formula: ((return-investment)/investment) x 100
- Social media campaigns — Look at engagement rates, new followers and fans, leads acquired, and click-through rates for posts
- Directing people to a landing page — Measure traffic, unique visitors, session durations per page, actions taken, and bounce rates
- Increasing overall brand awareness — Review metrics such as impressions and page views that indicate reach
Understanding Your ROI
Based on the goals and KPIs you decide to focus on, measuring ROI will vary. No two campaigns will involve the same method of measuring ROI if their goals and metrics differ. Some steps to take to help you understand your ROI include:
Knowing the 'Why'
If you understand the motivation behind your campaign and what you wish to achieve, this will give you the ROI of each tactic used to achieve it.
Make Sure to Measure Consistently
Consistent measuring is always required regardless of the campaign, which will provide consistent insight. Analyze everything via the same platforms and methods, which will prevent potential inconsistencies in data collected.
Use a CRM System
Simplifying processes is essential if you want to measure ROI efficiently to help you move your campaigns along and make changes as needed. One of the best ways to increase efficiency is to use a reliable CRM. A good CRM system such as HubSpot can help automate processes for you, consolidate any information gathered, and improve the layout of your data to make it more comprehensible.
Revisit Your Goals Regularly
It can be easy to lose sight of the original goals you had in place as your campaigns progress. Also, certain goals you set might not be as achievable as once thought. To make sure your campaigns are still aligned with your goals or decide whether you want to make any changes to those goals, revisit them frequently. Reviewing your goals can ensure you don't forget about the reasoning behind your campaigns, which will further help you stay on track when it comes to measuring ROI.
Get the Best Results from Your Campaigns By Understanding ROI
You could come up with the most creative marketing ideas and develop campaigns that help maximize reach and conversions. However, you won't have any real insight into the effectiveness of those campaigns without understanding ROI. By setting specific, achievable goals for your campaigns, choosing the KPIs to measure based on those goals, and consistently measuring ROI, you'll be able to measure overall success. In turn, you can decide what's working and what needs to be addressed and make any necessary changes to your plans to eliminate inefficiencies. Knowing your ROI will go a long way in helping you plan supercharged campaigns that help your business flourish.