How to Use Email Signatures to Increase Conversions
16th Dec 2019What Startup Businesses Need to Know About Digital Marketing
2nd Mar 2020
The Best Way to Measure the ROI of Your Marketing Campaigns
The key performance indicators you track should line up with the goals that cause the most business growth at the lowest cost.
Where to Start with Measuring the Return on Investment for Your Online Marketing Campaigns
One of the most enticing elements of digital marketing is its extreme trackability. Unlike traditional marketing measures where results are “guestimates”, digital marketing can give you solid numbers to prove whether your campaigns are giving you the results you need. But, making sense of the large amounts of data available to you can prove tricky. So where should you start when measuring your campaign’s ROI?
Choose Content Marketing Metrics that Matter to your Business
Back in the day marketers measured the good old ROAS (Return on Ad Spend), CTR (Click-Through Rate), and CPA (Cost Per Acquisition). While these metrics are useful, they aren’t always the top indicators of the success of your marketing efforts.
The key performance indicators you track should line up with the goals that cause the most growth at the lowest cost. A business whose growth relies on converting leads, for example, needs to ensure every marketing effort contributes towards that goal. Their ROI measures will also need to align with that goal.
What Are the Basics of Content Marketing Measurement?
First, choose your KPIs. Second, measure and manage the data. Third, interpret the results for insights and action points to make your marketing campaigns more effective.
- How to Decide which Key Performance Indicators to Track
- How to Measure and Manage Your Content Marketing Data
- Interpret the Data and Act on It
There’s so much data you can track, and not all of it is significant in guiding your marketing efforts. How do you know what does and doesn’t matter when tracking data? Start by determining what your most valuable measurements should be and which of the KPIs will support them.
Once you’ve determined these, you can establish performance benchmarks that give your goals substance. Finally, calculate how much it will cost you to execute your marketing campaigns. This number will help you calculate your ROI.
Many of these trackable indicators only show performance and are not connected to revenue directly. So, instead of tracking everything, aim to determine which indicators correlate with the highest downstream conversions (also called conversion or revenue leverage). Only track the data with which you can determine how much revenue your campaigns generated and how much it cost you.
Your data management efforts start with tagging each bit of published content so it can be tracked and compared to your benchmarks. Then comes the data collection. If data is collected too frequently, it hinders your ability to observe patterns surfacing in the data that can guide your future efforts. If you collect data too infrequently, there may not be enough detail to substantiate future marketing decisions and your ROI calculations.
Decide beforehand how often to collect data. You can always adjust timelines ass you go, but a month-by-month comparison is a great place to start. You can then use tools like Google Analytics to create dashboards where you can observe trends and make sense of all the data coming in. There are many tools you can use in this process, and you can even hire professionals who can analyse your data and advise your processes.
Some companies stop at the data collection process but interpreting the collected information and deciding how to act on what you find is vital to the process. You can find great tools on Google Analytics that track the basics, but for more in-depth attention to the who and why, add the latest marketing applications to your arsenal. With tools like AI-based personalisation platforms, you can find out which content pieces your audience is most likely to respond to.
Calculating your ROI
- Estimate costs involved in creating, distributing, and promoting your content. Factor in average production costs like design, copywriting, admin, team overheads, and tech tools you use.
- Calculate your ROI campaign by Campaign for greater business value.
- Collate expenses for the campaign and the total revenue from the campaign.
- Your Return on invest will be the profit after expenses divided by the expenses. For example, my expenses are R10,000 and my Revenue is R18,000. My return on investment score is R8,000/R10,000 = 0.8
- Do this for each campaign and combine results across all channels for your overall ROI.
Calculating your ROI Based on Leads
- Determine how many and what kind of leads you’re getting over the tracked period, say a month. These would be sales-qualified leads and marketing-qualified leads.
- Determine the average lifetime value of each converted lead by using historical data.
- Determine your conversion rate for SQLs / MQLs.
- Your revenue value per SQL will be calculated by multiplying the LTV with the number of SQLs and then multiplying it by your conversion rate. For example, If you got 200 sales qualified leads this month, and each lead has an average lifetime value to your company of R18,000, and your conversion rate is 6%, then your revenue value for all the leads will be: R18,000 x 200 x 0.06 = R216,000 and per single lead will be R1080.
- Use the above calculated total as your revenue and calculate your ROI using your expenses and revenue as detailed in the previous section.
Return on investment is what the boss really cares about. This means your marketing efforts should be substantiated by reports that make the ROI clear and attractive. Calculating your ROI can lead to better marketing results and a bigger budget for greater gains if you can prove the worth of your efforts to your executives.
Steven Green
Sporty fun loving “Half IronMan” with self-acclaimed degree in Search engine optimisation & Entrepreneurship. CEO & Founder of Trafficfundi, P.tch Digital & Greenies Comics.
