How Can I Measure the ROI on My Marketing Efforts? - An Interview
In this post, I’m sharing some information from my colleague. Kelli served for 4 years as a Brand Director for a national e-commerce brand, and shared many of her experiences about the complexities of measuring marketing. I learned some new things, and hopefully you will too!
Why is measuring marketing efforts so difficult?
In many cases, people think it’s more difficult than it really is. There is a perception that you simply can’t measure some things - but that’s very rarely true. Every organization does things differently, so that means executives will be looking at different metrics. Furthermore, in many companies, sales are a result of a mix of channels, from marketing to business development. Where does marketing end and sales begin? It’s hard to justify efforts when you can’t necessarily quantify results - but it’s important to try.
What is the most important thing to measure when it comes to marketing campaigns?
The numbers are important, certainly. But mostly you want to understand if your strategy is working. Should you stop that particular tactic, or double down on it? Knowing precisely how much revenue was generated is nice, but really you need to understand if the campaign worked. To do that, you need to clearly articulate your strategy in the first place. You also need to be able to isolate your campaign as much as possible. What else influences traffic, revenue, attribution? How can you separate those items to get a clear view of your specific campaign? Nothing happens in a vacuum - that’s the great part of marketing! But you need to be honest about what is “helping” your campaign, and what is strictly the result of your campaign activities alone.
Do you have a simple method for measuring ROI?
Quite simply: Money in, money out. You need to have a crystal clear view of the cost to implement a strategy. That includes fixed costs like supplies, as well as resources (employee time). You also need to look at opportunity costs - to the extent that you’re able. Any time you use resources, you’re applying them one place and taking them away from something else. All of that needs to be captured in the “cost” column.
Then, you need to articulate the financial gains from the efforts. To do that, you’ll need to control the variables we mentioned above. You also want to account for things like lifetime value versus just customer acquisition.
In as simple a format as possible, you want to create a mathematical correlation between the resources you were given and the revenue that was earned. You should capture the financial value of a person who participated in the campaign activity, versus those who didn’t. For example, the value of customers who have visited your blog, compared to those who didn’t.
So what are some reports to pull that can help do that?
I think proving the worth of your strategies, and of your overall team, is important when you’re looking at marketing performance. Here are some metrics I recommend pulling on a regular basis to get a better picture of your ROI.
Revenue generated - this is rarely straightforward, but sometimes might be.
Cost per lead acquired.
Customer lifetime value.
The cost - and value - of online marketing efforts. Pull the cost structure and resulting sales for each digital channel, such as: AdWords, social media, webinars, etc.
Website traffic to lead ratio - understand how much of your website traffic turns into legitimate leads.
Marketing leads that end up in the sales funnel - for example, how many of your webinar attendees result in a qualified meeting with your sales team?
Online form conversion rates.
Social media engagement.
There are many, many other KPIs that can be used to calculate the bigger picture, but these would be a great start in providing your company leadership an explanation of ROI.
For your marketing function to get money, you have to prove that you will earn more on those efforts. Demonstrating ROI is the best way to build your case and show off your success.