Measuring the impact of marketing and its return on investment (ROI) on your marketing spend has never been easy. The biggest risk to any business, however, is not taking the steps to provide clear metrics on their marketing campaigns. A study conducted by Kantar Millward Brown showed that over 75 percent of marketers would increase their marketing spend, if they had a greater ability to track ROI. Multiple factors need to be considered when reviewing what directly impacts your company’s success in a clear and measurable way. This article will address some of those key ways to get the most out of your marketing spend by measuring marketing ROI.
Goals & Objectives
The first step in your marketing campaign is to clearly define the goals that you are planning to track. You’ll want to understand three major things: the strategy, the cost of acting on that strategy, and the results from that strategy. Are you hoping to increase your number of followers? Or increase the traffic to your website? Asking yourself these types of questions can help you define what to look for in your marketing ROI.
Listing your SMART objectives can help assess the quality of what you measure. The term SMART stands for items that are – Specific, Measurable, Actionable, Relevant and Time-bound. Marketing teams can better understand what their work is achieving and how it impacts company sales and ROI.
Set your goals, objectives, and events in your Google Analytics or Customer Relationship Management (CRM) platform to evaluate your metrics and customer data. These types of platforms help with large data sets and can even generate automatic reports.
These brand metrics are focused on the “before-and-after” of your marketing campaign, and help you identify just how you developed overall in your strategy.
First to Last Touch Point
When you break down the number of first and last interactions for your audience, and the influencing touches in between, that you have with a customer during a marketing strategy can influence or drive a sale. You’ll be able to see what elements of your marketing campaign are driving more customers to make a purchase.
Through sales lifts, you identify the increase in sales during marketing activity. To track these metrics digitally, you can use UTM Codes, social media, or Google analytic pixels, to help you discover the exact path someone took to get to your checkout page. For offline tracking, studies can be performed using data from loyalty purchases or coupon redemptions, and compare the differences between people who were exposed to marketing material and a control group that was not.
Brand lifts are increases in achievements from the main marketing objectives of your campaigns. According to Marketing Land, brand marketers have used metrics such as awareness, brand affinity and likelihood to purchase, to successfully measure the impact of their brand advertising and gauge how consumers’ attitudes and feelings change around a brand.
Average Sales Cycle Length
This sales metric is the amount of time from your first touch with a prospect to closing the deal, averaged across all won deals.
Number of Referrals
This refers to the time spent researching, networking, writing, and engaging with others during your marketing campaign.
Reduced Investment Due to Savings
Dollars saved can be an important element when calculating ROI. By analyzing how much you saved from one channel or another in your campaign, you can then make efforts to improve and resolve issues in your current strategy. Some examples to compare include:
- what you spend on media, and the average impressions you receive as a result
- how much time and manpower is reduced from one strategy to another
This approach highlights the multiple touches a prospect goes through and attempts to measure the contribution of each individual touch.
Customer engagement metrics are all about sharing content, getting user feedback, and analyzing interactions that happen at every touch point.
Cost of Production
This involves the costs behind any external content assets you had to pay for, like images, video, audio or any outsourced work.
Web Traffic / Number of Users
Any time a new user lands on your website, Google Analytics assigns them a unique ID that’s stored in a cookie in your browser. This way, traffic can be connected to growth, revenue or lead generation, and help establish autonomy and conversions.
Number of Page Views
A “Pageview” is any view of a page that is being tracked by Google Analytics. You can analyze which pages on your website gathered the more or fewer views at any given time to take appropriate steps on improving your strategy.
This metric represents the percentage of visitors who enter a website and then leave (“bounces”), rather than continuing to view other pages within the same site.
Session Number / Length
Google Analytics counts a session on a website that starts right away when someone loads a page and ends after 30 minutes of inactivity. If that same individual comes back several hours later a new session is counted. Therefore, one person can log multiple sessions. The average session duration is the total duration of all sessions divided by your total number of sessions. You can also track what pages were viewed in each session, or what channel was used to view.
Number of Comments / Social Shares
Encourage engagement by crafting relevant, interesting and informative original content. When a business produces and shares a piece of meaningful content, conversations on post threads or higher volume of shares allow a business to establish authority and audience growth.
Number of Subscribers / Followers
An increased number of subscribers or followers after a campaign can be connected to brand loyalty, brand awareness, and customer growth.
Cost of Customer Acquisition (CoCA)
CoCA involves understanding how much it costs to acquire and convince a new customer to buy a product or service, and where the customer is sourced.
Cost Per Conversion (CPC)
Also referred to as cost per referral, a high CPC will indicate that your net income will be zero or into the negative, even if your website is pulling in attention.
The following metrics are centered around lead generation and the process of getting potential customers to purchase something from a business.
CTR (Click-Through Rate)
The CTR measures the performance of any call to action, whether it be located on a landing page, ad creative or email, etc.
Your conversion rate is one of the most important metrics you can track to measure ROI. This tells you how many of your visitors are performing a specific action (filling out a form, creating an account, etc.).
Cost Per Lead
Cost per lead is the total money you spend acquiring a lead (i.e. average cost per lead). You can review this amount by the following formula:
Money Spent On Capturing Leads / Total Number of New Leads Captured
Percentage of Qualified Leads, Opportunities, and Sales
These percentages cover the characteristics of your leads affected by your marketing campaign, and can be connected to revenue, overall lead generation and customer growth.
Quality Of Leads
The quality of leads is the net dollar amount a customer contributes to their life as a customer. Also known as the lifetime value (LTV) of your customer, this metric paints a more accurate picture on which of your campaigns are resulting in the best ROI.
According to Qlutch, a brand strategy company, understanding your company’s accounting method is also important for making accurate marketing ROI calculations. Though they are interconnected with sales data, the following metrics are a small part of a wide range of calculations you can deploy when measuring the ROI on your marketing.
Formula: (Sales Growth – Marketing Cost) / Marketing Cost = ROI
The simple ROI is easy to do and is typically expressed as a percentage, so multiply your result by 100. It is, however, loaded with the assumption that the total month-over-month sales growth is directly attributable to the marketing campaign. The best way to combat this is to provide comparisons, preferable month by month.
Campaign Attributable ROI
Formula: (Sales Growth – Average Organic Sales Growth – Marketing Cost) / Marketing Cost = ROI
Marketing is a long-term, multiple-touch process that leads to sales growth over time. This metric takes the simple ROI up a level and allows you to calculate existing sales trends.
Gross Profit + Marketing Investment
This metric includes the gross margin for products or services sold in the campaign and the marketing investment for the campaign.
Customer Lifetime Value (CLV) + Marketing Investment
CLV is a measure of the profit generated per customer or segment of customers over their lifetime with your company.
There are plenty of other metrics to follow when it comes to measuring your ROI. While this article covers just some of the key foundational measurements to be aware of, just as your marketing campaigns continue to expand and vary over time, the ways you can analyze your success will follow.