Main Menu

Proving the ROI of Your Marketing Activities

Why is Return On Investment (ROI) so Difficult to Calculate?

If you spend $1,000 on a writing service, you want to know you’re going to make $10,000 is sales as a result. Well, it doesn’t work that way. And this is where the ROI problem is detected.   Content marketing is not necessarily tied directly to sales.  It’s more indirect. We know it helps but it is difficult to concretely say this piece of content contributed to the actual sales transaction.

We all know that B2B buyer’s journey includes much online research before a sales person enters the picture. We also know that no one buys a product after reading a single blog post.  Rather it is a stepping stone leading them closer to the decision to buy.

There is the problem with ROI tied directly to each piece of content created. It’s impossible to know for sure. That is unless you asked your customer about every step of their research that lead them to the purchase in the first place.  That’s not a likely scenario.

So how do you measure the effectiveness of a content piece?

Start with measuring what can be measured. Things like the number of visits, number of likes, number of shares, number comments, the number of sign-ups, or number of click-throughs, etc.

At least you’ll know whether a piece is being read. This means you’re increasing your visibility and brand awareness.

Here’s a simplistic example.

Let’s say you write a blog post with a call to action leading the reader to a Landing Page. Let’s say the reader clicks the call to action to go to the Landing Page. Once on the Landing Page, the reader signs up for the offer.

The blog post’s job was to get readers to click the call to action. So did it do its job? Yes.

And did the Landing Page do its job to get the visitor to sign up for the offer? Yes.

By accepting the offer, the reader/visitor is now considered a warm lead or customer depending on your business. Now you have the ability to count the number of sign ups as warm leads or customers.

The scenario described above is a simple one. There may be multiple content pieces used to drive traffic to the landing page. As a result, it becomes quite difficult to know which piece of content lead the reader to the landing page.

“If I can say what is the number one way to measure marketing effectiveness it would be two things: Marketing Metrics and Predictive Analytics. First, marketing metrics is important because they tend to measure output things in terms of effectiveness. The second is a new trend: Predictive Analytics. Predictive analytics involves using statistics to examine and determine patterns in data.” says D. Anthony Miles, a nationally known expert in the fields of Entrepreneurship and Marketing. (Docurated.com)

There are ways to determine it though. With creative codes embedded in the piece and relying on the reader to enter such code when they get to the landing page is one way.  You can imagine how complicated that may get if you have multiple step process before the landing page.

Now let’s look at a more realistic B2B Buyer’s Journey example.

Think about a typical B2B buyer’s experience. They have a problem they need to solve. They begin by researching on the internet who else has this problem and how did they solve the problem. The buyer finds user groups and communities of users who have the same problem and talk about their trials at solving the problem. Maybe they find a White Paper that explains the problem in detail and offers generic means of solving the problem. Next, the buyer stumbles upon a case study providing hope their problem can be solved. Further research, lands the buyer on an article addressing the very thing they are researching with a call to action to sign up for a webinar to learn more. After attending the webinar, a follow-up email is received with a call to action to download a demo or schedule a consultation.

As you can see this is a long process that happens over a long period of time. Decisions are not made instantaneously. How would you measure every step in the process described above?  How would you tie each step together to see the whole path the B2B buyer went through?

Ryan McKee, Director of Brand Engagement at MEC shared the example below shows a typical user having 37 interactions before purchasing skis, bindings, and backpack.

There is definite value in having all these content pieces. For without them there would be no stepping stones for the B2B buyer to follow. But knowing the exact return for each piece is tricky.

How to Calculate ROI for a Content Piece According to InboundMarketingAgents.com

Step 1: To calculate true ROI, you need to know how much it costs you create content in the first place. Not just the content, but defining the strategy, the planning time involved, and the execution times too. What’s the total overhead of creating a content piece?

Step 2:Next you’ll need to calculate the value you place on goals or conversions, and what achieving those conversions is worth.”

Step 3: Now take the revenue that can be attributed to the content piece, and divide it by the cost to produce the content piece.

If the result is less than 100%, then you still have work to do.  If it is 100% or greater than you’re making more money than it took to create the content piece and you are profitable.

While the above is one way to calculate ROI, also consider ROI may mean more than dollars.  You may want to measure brand awareness, security risk mitigation, or customer experience. All of these may not translate to specific dollar amount earned.  So don’t get stuck on focusing on dollar only ROI calculations.

Select metrics that help you achieve your objectives and goals. Then establish discipline around analyzing your results and using those results to improve marketing efforts you implement.

In Conclusion

There will be times when ROI will be hard to measure. In those situations, you can always keep an eye on sales as you measure all the other things mentioned in this article. While it may be difficult to tie directly, there should be a correlation to sales. If you notice sales increasing, check out the other measurements to see if there’s an increase also. Talk with the sales department to determine if they ran any special promotions during that period of time, if not, chalk it up to your awesome marketing abilities.

 

Sources:

http://www.docurated.com/all-things-productivity/whats-your-1-way-to-measure-marketing-effectiveness

http://www.inboundmarketingagents.com/inbound-marketing-agents-blog/bid/364737/Proving-ROI-Proves-to-be-Marketers-Biggest-Challenge

https://www.crazyegg.com/blog/measure-marketing-roi/

Prove the ROI of Your Social Strategy Webinar hosted by HootSuite June 24, 2017

 

What Web Metrics Should You Measure? By Robert W. Bly

 

             I may be wrong. I frequently am. But there are three Web metrics people seem overly concerned with that I just don’t worry about.

3 Web Metrics to Forget About

1. The first is open rates. Since both my e-zine and e-mail marketing messages are text, I can’t measure open rates.

I could convert my text e-mails to text in an HTML shell, which would enable me to track open rates. But why? As long as an e-mail is profitable, generating a lot of sales, what do I care how many people opened it? After all, in direct mail, we only know how many people responded by returning the order form with payment. We have no idea how many people opened the envelope or whether they read the contents.

2. The second metric I don’t care about is page views: what pages of my Web site are visited most, how many minutes the average visitor spent on each page, which pages people returned to, and so on.

Again, my concern is whether the Web page can convince visitors to order the product … or if they don’t order, at least get them to give me their e-mail address and opt into my list.

3. The third thing I don’t care about is complaints. A reader recently asked me, “How many complaints do you get from AOL users?” Why would I track AOL users separately from the rest of my list?

Look. I don’t like complaints. If someone doesn’t like an e-mail I sent them, I take it seriously and respond thoughtfully and politely. But it doesn’t keep me up at night. Just as they can change the channel if they don’t like what they hear on the radio, they can opt out of my list if they don’t like my content – and they should.

Okay. So what Web metrics do I, as a small-time operator and Internet entrepreneur, really care about?

5 Web Metrics to Focus On

There are five I watch like a hawk. More than that, I live and die by them. If the numbers are good, I have a smile on my face all week. If they plummet, it’s like a black cloud over my head.

Here are the metrics I monitor:

  1. Click-through rates (CTR). When I send an e-mail to my subscriber list, how many of the people on the list click on the URL link to the landing page? We measure total clicks, unique visits to the landing page, and the CTR, which is a percentage: if 800 people on my list of 40,000 click-through, that’s a 2% CTR.

With e-mail marketing messages sent to your house e-list, CTR can range from 1% or 2% on the low end, to 10% or even 15% on the high end. These CTRs are for e-mails selling a product, not e-mails inviting the reader to get a free white paper or other free offer.

  1. Conversion rates. Conversion means converting people who visit your landing page into buyers. If you generate 1,000 clicks to your landing page, and 100 of those people place an order, your conversion rate is 10%.

Conversion rates can range from 1% or 2% on the low end, to 10% or more on the high end. Inexpensive products generally have higher conversion rates, while an e-mail promoting a big-ticket item can be profitable even with a conversion rate below 1%.

Combined, the click-through and conversion rates determine how many units you sell. For instance, if you get a 3% CTR on a list of 40,000, you get 1,200 clicks to your landing page. If your conversion rate is 5%, the e-mail generates 60 orders.

  1. Gross sales. This is the number of orders generated by the e-mail multiplied by the selling price of the product. On the above example, 60 orders for a $29 e-book generate gross revenues of only $1,740. But for a $249 product, 60 orders produce total sales of $14,940. In my little Internet business, the former would send me into a deep funk, while the latter would have me popping the champagne cork.
  2. Opt-out rates. Every time you e-mail to your list, a certain small number of subscribers decide to opt-out or “unsubscribe” from your e-list. That’s a bad thing, because unless you do something to generate new subscribers, your list will gradually dwindle to nothing.

What is an acceptable opt-out rate? My average e-mail to my list of 40,000 causes about 20 people to unsubscribe, which translates into an opt-out rate of 0.05% — half of one-tenth of a percent. I think you can live with an opt-out rate of 0.1% per e-mail, but more than that, and your list will shrink too rapidly.

  1. Dollars per name. Dollars per name is the dollar value of each name on your list – the amount of revenue per name. If you make $200,000 a year in online sales from your subscriber list, and you have 40,000 subscribers, your dollar value is $5 per name per year.

Why is this important? Because the various methods of building your e-list – pay-per-click advertising, co-registration, banner advertising – all cost money. So your dollars per name tells you how much money you can afford to spend to acquire new names for your e-list.

For example, if your dollars per name is $5, you certainly can afford to pay $1 to add new names to your e-list: on average, you’ll earn five times your investment within one year.

Say you use pay-per-click advertising to drive people to a landing page where you offer a free report as an enticement to opt into your e-list, and half of the people who visit the page accept the free offer and subscribe. You can therefore afford to bid up to 50 cents a click, since it takes two clicks – costing a dollar – to get one sign-up.

Now, general advertisers, brand marketers, and b-2-b marketers generating leads rather than direct sales may care about many other metrics, including open rates and page views. But for the direct marketer selling a product online, the five metrics listed above – click-through rate, conversion rate, sales, opt-out rate, and dollars per name – are the most important metrics you can track.

This article appears courtesy of Bob Bly’s Direct Response Letter

7 Ways to Measure the Return on Marketing Investment

You’ve heard the term ROI – Return on Investment.  Naturally, the term ROMI would mean Return on Marketing Investment.

Dr. Deming said, “If you can’t measure something, you don’t know what you’re doing.” Therefore, if you not measuring ROMI, you don’t know what you’re missing.

Failing to measure something means you could be losing money. If you are measuring something, but don’t do anything with the results, you ARE losing money.

Let’s stop the unproductive cycle by plotting a course that leads to profits and improved efficiencies.

So how do you measure ROMI?

That all depends on your marketing goals.

There are various ways to measure your marketing efforts. But the trick is identify the measures that make the most sense for your business goals.

Step 1: Identify your business goals.

The most logical place to start is with identifying your business goals. There is no one particular goal that fits all situations. Really think through what you want the marketing tactic to achieve. It must be measurable too.

Use the acronym S.M.A.R.T. to help you think in terms of measurability of your goal.

S – is it specific?

M – is it measurable?

R – is it relevant?

T – is it time-dimensioned?

If you don’t have business goals clearly identified, how will you ever know when you reach them?

Step 2: Identify your target audience.

Knowing your target audience is a crucial step. Therefore, your marketing tactics must be geared towards your target audience. If not, you’re wasting marketing funds on unproductive efforts.

Understand who your target audience, where they hang out on the internet, and how they prefer to connect. You need to know what they like and don’t like and what problems keep them awake at night.

Furthermore, put yourself in your audience’s shoes. Think like they do to really understand them. See how they try solving a problem. Search for how they achieve a goal. Look at how they satisfy their need.

Step 3: Assess you business’ capability.

Next, list out all the marketing tactics you are currently using. This helps you understand what your current capabilities are so you don’t overextend your resources. For example, just because there are hundreds of places to connect online, this doesn’t mean your business must have a presence on all those places.

Look at where you are present and compare that with what you considered about your target audience.

Step 4: Assess your tactics against your target audience’s preferred method of contact

Have you ever considered the way you approach a client could cause them to leave or stay with you for life?

Therefore, are there tactics you are not using your target audience would prefer you use? And, are there tactics you are currently using your target audience doesn’t care about?

Step 5: Map your marketing efforts to your target audience

Identify the ways your target audience prefers to be contacted or engaged.

Then, map out your marketing efforts through those preffered channels. For example, if you learn your audience hangs out on Facebook, then you should definitely have a Facebook presence.  If your audience never goes to Facebook, then what value would having a Facebook presence bring?

Think strategically. Only setup and maintain social media platforms that are where your audience is.

Step 6: Identify your Marketing measurements

Next, move to the critical step of identifying what to measure. Your business goals with determine the measurement.

For example, one goal might be increase your subscriber count. Therefore, one measurement might be the number of new subscribers.  Remember, you can have multiple goals per marketing tactic.

Revisit each goal you identified earlier and identify an accurate measurement for it.

Then, you will take a baseline measurement before making any changes in marketing tactics. This will tell you where you are starting from. This is an important step. If you fail to measure this first, you won’t know how successful your tactic really is.

After you implement a marketing tactic adjustment, take another measurement. Be sure to allow enough time to pass before measuring again. This will allow you to gather enough data to assess.

Compare this measurement to the baseline measurement. Determine if any progress was made.

Look at the results. Did the marketing tactic change the results in a positive way? If not, reassess.

Step 7: Reassess over time.

In conclusion, the process outlined in this short article is not a “one and done” approach, but rather an on-going process. As customers change, your marketing tactics may need to change too. Many factors make it necessary for your marketing plans to be flexible.

Therefore, set up a process that allows you to measure regularly and assess often.  You want to be nimble and able to change/improve your marketing tactics to coincide with the changing trends of your audience.

Read more about my services to see if we’re a good fit for your project.