Companies measure the success of campaigns through ROI (Return on Investment) – it is a financial metric that lets the company calculate the financial impact of various activities and decisions on the overall revenue. The reason that this metric has gained so much importance both for the financial and marketing departments is that it provides long-term planning insights.
Here are some of the ways to measure ROI on any activity:
1. Set clear objectives: Analyse all possible available data related to your company’s activities in finance as well as marketing. Set a clear goal or objective for your company to achieve, whether it is in terms of minimizing costs, improving ROI or scaling up operations. Focus on how you plan to deliver in terms of the overall business goals – this will enable you to build better campaigns.
2. Calculate: The basic ROI calculation involves taking the profit margin, the revenue from the marketing campaign, and all the expenses related to the marketing campaign. The first step towards gathering these metrics is to carefully define how marketing revenue will be measured, during the planning phase of the campaign. Then, arrive at the following formula: ROI = Campaign Revenue X Profit Margin / Cost of the campaign.
3. Know when and what to measure: The impact that today’s investments can have in the future depends on a lot of different factors. How you define marketing ROI also depends on your end-goal. When you build marketing plans, ensure that they tie into your bottom line so that you have an effective way of measuring them. Decide where you would want to invest your budget today, based on a careful study of available data, in order to reap better ROI in the future.
4. Use the right attribution model: In order to measure ROI effectively, it is important to know the right kind of attribution model. While first-touch attribution will allow your company to attribute the first place where your customer discovers you as the point of credit for any sales thereafter. On the other hand, last-touch attribution would consider the final marketing activity that converted a prospect into a customer. Depending on what constitutes a sale or a success in sale, you can measure the ROI accordingly.
5. Bring your research together: The final step to measure ROI is to carefully go through all your previous research, assess your findings and begin putting together data that correlates to the KPIs that were set at the beginning. Proper coordination between the finance and marketing teams can ensure that any activity can be measured to determine the success of your efforts.
The above are some of the marketing tips that will help you to measure ROI on any activity that your company performs. Clarity on ROI will enable both the marketing and finance departments to work fully in sync and deliver valuable insights for all your forthcoming marketing efforts.