You have to spend money to make money. This is something everyone in business understands. However, it can still be hard to know whether you’re spending money in the right way to ensure you end up making more money later. Return on investment (ROI) measurement is critical to marketing success.
One area that can be especially hard to track is marketing. Marketing campaigns can be expensive. They can also have pretty huge payoffs if they’re effective. That leads many marketing managers to ask themselves: how can I ensure I’m getting the ROI on my marketing campaigns?
ROI data gathering methods
There’s no single surefire way, but there are a few tricks that you can use to help get a gauge on whether your campaign is currently working to your organization’s benefit.
The first method to track how much revenue your ad campaign is bringing in is to conduct some straightforward social science research. The exact methods you use will depend on what data analysis software you have access to, but the basic idea works like this.
In order to see whether a marketing campaign is having the desired effect, measure your average rate of sales in the months before you implement the campaign. Make sure there aren’t any confounding variables — conditions that might muddy your results. For instance, if the season immediately before your marketing campaign went into effect was Christmas, this might make it hard to tell how well your campaign has worked.
Once you’ve got a baseline measurement for your average sales, implement the campaign and run it for a few months. If you notice an uptick in sales during that period, it’s likely that the marketing campaign was a cause.
Note: Correlation is not causation. Remember, there may always be other factors at play that affect your campaign’s effectiveness.
Another popular way to test the effectiveness of a campaign before committing is using A/B testing. A/B testing can be most easily used with leads online. Here’s an example:
Let’s say that you are building an email marketing campaign. You’re torn between two email options, and don’t know which will be most likely to attract customers. You can A/B test by sending out one email to a small sample group and the other email to a different group. Then wait to see which of the two groups was more enticed to engage with your brand. For a more complete guide to A/B testing, check out this post by VWO.
Customer satisfaction surveys are a great way to improve your business. They can also be useful tools for tracking a marketing campaign’s success. Here’s the basic idea.
Customer satisfaction with your brand will depend on their perception of your brand — what comes to mind when they think of you, what lifestyle they might associate with you, and what past experiences they may have with your company. When filling out a survey, they will offer key insights into whether you’ve met their expectations.
Part of a marketing campaign’s success isn’t just an increase in sales (though that is the ultimate goal). It is also an increase in trust among your customers. More trust among customers will lead to returning customers, one of the biggest sources of revenue in almost any industry. If you find out that customers have a favorable view of your brand, great past experiences, and positive associations, you gain insight into your campaigns’ success.
This is especially useful when paired with A/B testing or a correlational study of your business’s incomes, as direct qualitative feedback from customers can help you narrow down the reasons for your increase (or decrease) in profits.
SEO and CRO
Not familiar with these terms? Don’t worry, here are a couple of handy definitions:
- SEO: Search engine optimization is the process of improving the search engine rankings for a website or brand. For instance, Google “cat food,” and see what comes up. The top result is likely a brand you’ve heard of (if you’ve been around cats). It’s safe to say that they have solid SEO, as their result showed up at the top of Google.
- CRO: Conversion rate optimization is the process of increasing the number of page visitors who actually follow through with a purchase. It often involves making your products look more enticing, your brand more trustworthy. CRO also helps your website and ecommerce platform become more user-friendly.
Here’s an example of a conversion rate-optimized page from the estate planning service Trust & Will. Note that the graphic design makes their pricing options appealing. The layout appears accessible. The elegant site layout offers a sense of authority and trustworthiness.
How do SEO and CRO help you track your marketing campaign success? It’s pretty simple. If your marketing campaign is successful and you’re hitting close to your ROI goals, it’s likely that both your ranking and your conversion rate will improve.
Additionally, this is a positive feedback loop. Improving your SEO and CRO are likely to positively affect your profit margins and can boost the overall effectiveness of your marketing strategy.
Determining whether the campaign is worth it
The last step in tracking your marketing campaign’s progress is to collect your data and start your analysis. Heads up: this is going to involve a little math. You’ll first have to figure out how much money you’ve spent on your ad campaign; this should simply require tallying up the expenses on whatever software you track business spending.
Once you have that figure, it’s time to compare it to the increase in profits your campaign has led to. (Decrease in profits? It might be time to rethink that ad campaign.) You can use the methods listed above to estimate the total amount of revenue your marketing strategy brought in.
Ask yourself questions like these:
- How much have profits increased over time?
- Is that amount more than the amount that we have spent on the marketing campaign?
- If it is more, how much more is it?
- What percentage increase in sales have we seen after the campaign was put into place?
- Is that percentage enough to justify the continuation of the campaign?
Once you’ve researched these questions and arrived at satisfying answers, you will have a solid idea about whether your marketing campaign is progressing the way you need it to be. ROI can be a difficult figure to arrive at with confidence. With the right data collection and analysis, getting a working idea is possible — and will help your business thrive.
This guest blog article was written Samantha Rupp, who is the managing editor for 365businesstips.com. Samantha holds a Bachelor of Science in Business Administration. She lives in San Diego, California and enjoys spending time on the beach, reading up on current industry trends, and traveling.