How To Identify, Assess, and Enhance Your Marketing ROI
Ready to be successful in business? Are you open to spending the dollars needed to get a return? If that is the case, let’s first ensure you are aware of how to identify, assess and enhance your marketing ROI. Whether you are getting started in your marketing initiatives or even at the point of seeking investors, the following points will assist you in successfully building your business and knowing what will be asked of you. You better know the answers, friends! I remember the early days of being in retail management and having visits from Regional Directors. The numbers were what they wanted to know, and not having those answers readily available and memorized was counterintuitive to being a respected manager. Don’t be that person stumbling over their numbers – PLEASE!
I highly recommend watching Shark Tank or The Profit for some additional insight and real-life examples of when knowing your ROI numbers is important. Ready to learn more? Let’s begin.
What is ROI?
ROI stands for “return on investment.” It is a performance measure used to evaluate the efficiency of an investment. By measuring ROI, you can see what benefits your business when it comes to marketing campaigns.
To identify the ROI of your digital marketing campaigns, you must see which ones are most effective in driving sales leads, page views, and conversions. You can use this data to fine-tune your future campaigns for even more successful results. While identifying ROI, always factor in all the costs that go into a campaign, from creation to management. This way, you’ll get an accurate idea of your return on investment. Keeping track of results and making appropriate changes to your marketing strategy is key to enhancing your ROI.
What Is Marketing ROI?
Marketing ROI measures the return on your investment from marketing campaigns or how much revenue is generated as a result of your promotional activities.
To evaluate how successful your marketing strategy is as a whole, use ROI. You want to be able to determine which campaigns or promotional activities you should continue and which ones should be thrown in the trash!
How To Identify Your Marketing ROI
There are a few important steps that can help you to determine your marketing ROI. Let’s dive in.
1. Cost Per Lead (CPL)
Don’t you want to know how much it costs to acquire each lead? This is an essential metric to measure.
In an official sense, the cost per lead metric determines how efficient a company’s marketing efforts are. It is calculated by dividing the total marketing expenses by the number of leads generated. This gives you the cost per lead or how much it costs to generate a lead. To calculate the ROI, you need to subtract the cost per lead from the average selling price of a customer. This will give you the net profit per customer. Then divide that number by the number of leads generated to get the ROI.
2. Cost Per Acquisition (CPA)
How much does it cost to acquire a multitude of leads? Cost per acquisition (CPA) is a metric used to measure the effectiveness of a marketing campaign. It is calculated by dividing the total cost of the campaign by the number of new customers acquired as a result of the campaign.
If the cost per acquisition outweighs the cost of your service, you have a problem. For example, if you spend $1000 on ad campaigns and acquire 1 lead from that $1000, but your service or product costs $5000, you have a great (80%) profit margin – kudos to you. Now, think, if you spent that same $1000 and your service or product cost $50, friends, you are losing —a lot! It’s time for you to reconsider your marketing strategy. Get it?
3. Customer Lifetime Value (CLV)
How long do customers remain buyers of your product or service? Are they repeat customers, or have they only purchased once and gone on to better pastures? This is essential to know for yourself and when it comes to investors and understanding how valuable your offering is. Do people love it so much that they continue to purchase from you? If so, you are in a good place.
Investors want to know how much customers are likely to spend and how often. This determines whether you will have a consistent flow of revenue.
To calculate customer lifetime value, multiply the average sale per customer by the average number of times a customer buys from you each year. This metric can help determine whether it is more profitable to focus on acquiring or retaining new customers.
5. Return on Ad Spend (ROAS)
What’s your budget for ad spend? Plenty of agencies and individuals can promise you results on your ad spend, but in most cases, it takes some time to see ROAS, and as a small business owner, it’s important to know where your dollars are going AND if it is worth it. Return on ad spend (ROAS) is a metric used to measure the profitability of spending all that money on ads. It may even determine if you should spend more!
It is calculated by dividing the total revenue generated by a marketing campaign by the total cost of that same marketing campaign. This metric can help you determine whether a marketing campaign generates a positive return on investment (ROI).
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How To Enhance Your Marketing ROI
Want to know how to improve your results or even use an entirely different approach? Check out our tips below for improving your ROI.
1. Determine Your Core Metrics
The first step is understanding what YOU should measure to assess your marketing ROI accurately. Where you are in your business, this will vary depending on your business and goals. Still, some common metrics include website traffic, leads, conversion rate, customer acquisition costs, and lifetime value. If you are starting out, lead magnet numbers, webinar sign-ups, number of calls versus the time it takes to make those calls, conversions, and website visits may all be common metrics for you to measure. Your metrics will become more technical as your business grows and lead numbers amplify. Think cost per acquisition, per click, lifetime value, and the number of leads you are acquiring versus conversions. Once you know which numbers matter most to your bottom line, you can focus on ways to improve them.
2. Set Realistic Goals
Knowing what a successful marketing campaign looks like for your business is important before you start planning. This way, you can ensure that your team is on the same page and working towards the same objectives. Trying to accomplish too much can lead to a scattered approach and make it difficult to measure results. If you are confused about how to start a marketing plan, connect with us to curate a unique marketing plan just for you!
3. Invest in Marketing Automation
If you’re not using marketing automation software, you should be. Automation can help with a number of tasks, from email marketing to social media and lead nurturing. Not only will it save your team time, but it can also improve your ROI by helping you to better target and track your campaigns. The goal is to schedule social posts. To create a set of email marketing workflows to nurture your leads and increase your conversions. Not to mention, marketing automation will provide you with more data. From email, open rates, email click rates, social media post likes, and impressions to much more, the more you know, the more effective your decision-making will be in your marketing and overarching business initiatives.
4. Try New Marketing Channels
Don’t be afraid to experiment with different marketing channels, even if they’re outside of your comfort zone. You never know which will be the most effective for your business until you try it. Just be sure to track your results so that you can quickly adapt or abandon any that aren’t working. I did NOT want to go on TikTok, but once I did, my impressions, leads, and conversions increased. The lesson is apprehension may be the sign you need to follow. Consider new marketing channels. Don’t allocate too much too soon, but ensure you are willing to try new things to reach your goals.
5. Keep Track of Your Ad Spend and Income
If you want to improve your marketing efforts, keeping track of current initiatives’ performance is important. This seems like a no-brainer, but it’s important to keep tabs on how much you’re spending on marketing and how much income it’s generating. This will help you to quickly assess which campaigns are providing the best ROI so that you can adjust your budget accordingly. Take a look at your spend and income daily, especially when you first begin. It’s all about winning, and winners take heed to data!
Make sure to compare conversion rate, leads, and profits. From there, you can decide whether the results are acceptable or if you need to make changes. Remember, even small improvements can significantly affect your overall results.
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6. Invest in Market Research
Ask questions, get answers. Simple, but true. If you want to know what your customers want, the best way to find out is to ask them. Market research can be a valuable tool for understanding your target market and what they’re looking for. This information can then be used to improve your marketing strategy and produce better results. Use surveys, send personalized emails, make a call to a current or recent client or customer, and get the answers you need to make decisions.
7. Try A/B Testing for All of Your Campaigns
A/B testing, also known as split testing, compares two versions of anything – a landing page, email campaign subject line, ad graphics, audience segments, and so on. The point is to gain insight into what outperforms the other. By testing different elements in marketing, you can determine which changes prompt visitors to take action.
To get started with A/B testing, create two versions. Then test based on your marketing initiative type, share then watch for results. Once you’ve found a winner based on higher conversion rates, move further with that one and scrap the other.
Some things you can test with A/B testing include:
Copy
Graphics
Navigation links
Calls to action
Colors
Audience segments
Subject lines
Engagement tools (talent, gifs, video, etc.)
By split-testing, you can make informed decisions about which changes lead to more conversions. So don’t be afraid to experiment until you find what works best for your business!
8. Improve Your Targeting
If you’re not getting the results you want from your online campaigns, it might be time to re-evaluate your target audience. Try targeting a different demographic, interest type, or geographic region. You may also consider changing your ad copy, graphics, or offer.
It’s important to constantly test and improve your targeting strategy to reach the right people with your message. Otherwise, you’re just wasting your time and money.
9. Create a Better Offer
If your landing page isn’t converting, it could be because your offer isn’t compelling enough, your copy isn’t resonating, or there is a lack of branding consistency. Look at your competitors’ offers, web page design, and CTAs, and see how you can improve yours.
Your offer should be something your target audience actually wants or needs. Most importantly, it should speak to solving their struggle. It should also be unique and relevant to your product or service. If you’re not sure what would make a good offer, try surveying your target audience to see what they’re looking for and compare their needs to your talent and skill set.
10. Share Information and Offers Effortlessly and Efficiently Across Devices
In a world where people use multiple devices throughout the day, it’s important that your marketing campaign can be easily accessed no matter where they are. This means creating responsive websites and ads that can be viewed on any device. It also means making sure that your email campaigns are mobile-friendly.
In today’s age, having a presence on one device is not enough. You need to be everywhere your customers are, and you need to be reaching them often without overwhelming them. In the past, it only took 3-5 touchpoints to get a sale. Now it can take upwards of 15 touchpoints. So be consistent, and reach them easily on each device.
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