Why You Need Marketing ROI
Businesses are always looking for new ways to drive revenue while cutting down on margins at the same time. The return on investment in marketing needs to be considered from the beginning, as a way to gauge your goals and track your progress. Not only do marketers need to consider what exactly the return was, but which program received the best return. If you measure your ROI correctly, it can garner more trust, a bigger budget, and enable your marketing tactics to increase your business impact.
The demand for marketing ROI
The simple truth is that businesses will continue to cut down on margins, and marketing is often the first thing to get cut. If your executives don’t see an inherent worth or return on your marketing efforts, they won’t see a need to keep it around. Which means that your marketing department needs to prove it’s worth. Think of the return on investment as a promise that will outline how your department is going to contribute to the success of the company, as a way to continue to justify the investment in marketing.
Gauging the metrics for success
Once you start using a revenue-based approach to your marketing strategy, you will need to rethink the metrics that you are gathering. These need to be actionable and provide insights on how and why your marketing efforts worked, and how you can approach your marketing efforts in the future. Consider the following metrics when you’re looking at your marketing strategy:
- Campaign performance – Looking at the performance of your campaigns can give you an idea of the of specific metrics that can tie back to revenue. Whether this is an email marketing campaign, social media campaign, or even an event-based campaign, these metrics have to show that your bringing in revenue. The best way to measure revenue from campaigns is to look at an increase in sales around the time of the campaign, the value of an average order or the cost per action. In a revenue-based metric, you’ll focus on these standards rather than the open rates or social interactions, which don’t heavily affect revenue.
- Channel performance – After looking at your campaigns, you should examine your specific channels. Identify which channels are driving revenue and netting conversions, and compare them to the channels aren’t performing as well. Optimising your channels can increase your sales conversions, brand awareness and channel reach.
- Business impact – Once you look at your campaign and channel performance, you can identify your overall business impact. Here, you will generate insights on that show a definitive return to support a decision-based approach for your marketing campaigns. The business impact of your marketing efforts should include revenue growth, shareholder value and customer lifetime value.
Measuring ROI throughout your marketing strategy is essential to understanding how your marketing tactics are contributing to the growth of your business. If you need more information on what your marketing ROI should look like, contact Marketing Eye today!