Ways to Measure and Improve your Marketing ROI
Evaluating marketing ROI allows you to continuously improve marketing performance and profitability by applying insights to maximise the effectiveness of strategic and tactical decisions. In order to have these insights you need to develop relevant measurements and determine the most appropriate financial model to represent ROI which provides a clear view on the contribution your marketing strategy and tactics deliver to additional sales and profits.
There are a number of key questions which you will need to answer to set up marketing ROI measurement, some of which will be quite simple whereas others will be more complex and challenge the activities you undertake:
- Does each marketing activity deliver incremental sales opportunities? Depending on your business model this may be segmented further into targets which define the sales pipeline with appropriate measurements, for example, delivering a specified number of leads, face-to-face meetings, product demonstrations and subsequently conversions. You might do this by integrating call tracking with your website analytics to get a more holistic picture of how successful your marketing campaigns are.
- How do you make the different combinations of marketing activity work to maximum effect to deliver incremental sales opportunities? Clearly this is a more complex assessment which requires some form of modelling to determine the weight attributed to each activity within the marketing mix. Determining the right measurement will take time and effort, but will reap endless rewards in the form of having the data to justify marketing spend and for changing the overall mix of activity. Using conversion attribution reports available in web analytics and call tracking technology allows you to see how important each channel is in the mix, thus allowing you to assign a level of importance to each.
- What happens to incremental sales when we provide different offers, change the frequency of our activity, change the message we deliver or do split tests against any of these activities? Such experimentation needs to be undertaken on a frequent basis to ensure that marketing activity is refined and consequently optimised to deliver the maximum additional opportunities. Do, however, keep changes to a minimum as you need to be able to attribute the impact of such changes to a particular initiative and clearly this will not be possible if there are too many changes. Custom variables will give you an extended understanding of how a customer is interacting with each page of your site. For example, if they were filling in an online enquiry but decided to call instead, which part of the form drove them to contact you directly?
- What impact will new initiatives have on incremental sales? It’s not just about reviewing what you do now, it’s also about evaluating the impact of future initiatives to ensure that you are making informed decisions. Each initiative will need to be measured in its own right and in the context of all other activity to truly understand the marketing ROI. Historical data needs to be available to ensure that you can measure this, so by using analytics suites, such as online analytics and call tracking technology. This enables you to look back at the impact of specific campaigns and make informed decisions about future campaigns.
You should use ROI analysis to prioritise marketing initiatives that have greater impact on high value segments and drive conversions, identify where additional spend can generate positive returns, provide guidance on the point of diminishing returns, and indicate where improvements in supporting the buyer’s purchase funnel can have the greatest impact. It is not possible to measure everything in marketing so measurements must be prioritised based on the expected improvement to effectiveness, the strategic benefit of gaining insights that can influence many marketing initiatives, and the cost.