With many marketing managers under mounting pressure to stretch their budget and think increasingly more strategically about their activities, it is more important than ever to successfully justify marketing ROI.
Reporting to the board or senior management and simply stating that ‘last month was a great month’ just simply isn’t enough. Every year it gets more difficult to compete with the results from the last and therefore it’s essential to understand how to effectively validate your results.
- Know the basics
Before you start it is crucial to have a clear understanding of financial investment (both actual pounds spent and hours invested) to calculate the overall cost of the campaign. You will then know exactly what is required to achieve a positive ROI. Put simply, money in vs. money out. Although this sounds obvious, it’s important to keep at the forefront of marketing activities as it can easily get lost within the details.
- Set goals
It’s vital to make sure that you fully understand what exactly will define the success of a campaign. Always keep in mind the wider business goals and set objectives which will complement these. Firstly, you need to decide what the overall aim of the campaign is to achieve, whether it be brand awareness, leads, sales or customer loyalty for example.
All KPI’s should be realistic. Remember to take into consideration existing performance to make sure they are sensible. It is fundamental to ensure that any campaign goals are related to increasing the bottom line.
- Measure the results
It’s critical to track the progress of your marketing campaign throughout its entire duration, remembering to track conversions at every stage of the sales cycle. In relation to the example goals listed above, below are some suggestions to effectively track the value of your campaign and support justification of ROI:
- Brand awareness – Social reach, website visitors, page views.
- Leads – Content downloads, enquiry form submission, webinar/ event sign ups.
- Sales – Cost of customer acquisition, number of new customers.
- Customer Loyalty – Lifetime value of customer, up sells, newsletter sign ups.
In certain scenarios it can be very difficult to prove the value of ROI. Brand awareness is one of the most difficult goals to track effectively. You must try and relate your efforts as closely as possible to the business goals. For example, if you are embarking on a social media campaign, tracking the number of likes/ retweets/ +1’s is just not enough. It is imperative to gather further information on reach, referrals to website, leads generated, sign ups and/or revenue generated to truly indicate the ROI of this particular campaign.
Don’t be afraid to make changes along the way. Find out what is working and do more of it to increase the value of a campaign over time.
You have the results, it’s now time to turn the figures into meaningful data to present to your superiors. Reporting needs to be more than just listing email open rates or social shares. It’s key to show how the results affect the bottom line. Including details on the cost of new customer attainment and the long term value of a customer are often great metrics to use.
Digital marketing has set the benchmark for measurable marketing BUT it is important to ensure that results are linked to the company’s overall goals. At the end of the day, if you can prove that you have achieved a well thought out goal closely associated with the overall business goals, you can’t go far wrong.
And, if that’s not enough… marketers that measure ROI are 12 times more likely to generate return than those that don’t.