Every business spends time and money on marketing. Do you know what you are getting in return? Is measuring your marketing ROI part of your marketing strategy? If not, your marketing budget (and time) may as well be flushed away! Here are reasons why measuring your marketing ROI isn’t just a should do, but a must do.
When you create a marketing campaign, you must have some objective to work towards. You need to set clear, measurable goals. If you don’t, how will you know if your marketing campaign has been successful or not? You need to understand what works, and what does not work for your business. Here are some reasons why measuring your marketing ROI isn’t just a should do, but a must do.
#1. You Can’t Spend Wisely If You Don’t Know What is Working
Without knowing what is working for your marketing then you cannot possibly be spending wisely. But the good news is that marketing has really become data driven these days, especially with digital and social marketing activity. Data informs you if your creativity and messages are delivering results.
- Start by setting clear measurable goals for every marketing campaign you run. These could be “generate X leads” or “achieve Y reach on social media”, whatever is important for your campaign and business.
- Decide what data you need to collect as the campaign runs. How will you know that a lead was generated?
- Make sure all the processes are in place for people to take action on your campaign. So if you want them to give you their email address, make sure that is a seamless process for the user. Test everything before your campaign starts.
- Make sure you have your tracking in place so you know you can track that behaviour you hope to encourage.
- Finally after the campaign is over, pull together the results of the campaign and compare to your goals.
For each marketing activity you want to measure, you’ll need to select the tool that is best at measuring that activity.
- The bigger social media channels such as Facebook, Twitter, Instagram, Pinterest offer insights and analytics that you can use to analyse things like reach and engagement.
- Google Analytics, Kissmetrics and Marketo are some analytics tools which can track and measure how your audience responds to your marketing activity online. So if you have created a landing page you can see how people arrived at that landing page, how many visits the landing page had, what the conversion rate on the page was.
- Most mailing software providers such as Mailchimp have reports that show open and click rates.
Tip: Don’t be despondent if the campaign didn’t reach the goal(s), marketing is an ongoing evolutionary activity and you may need to try again with a different message. Try to work out why this campaign didn’t deliver. Ask for some customer feedback if you need to, maybe the message was wrong.
Recommended Reading: How to Use Google Analytics to Deliver Results
#2. Measuring Avoids Guessing
Historically, the success of marketing campaigns used to be assessed in a vague way. People in organisations thought the campaign had worked. Maybe sales of products increased during that time, but they couldn’t be 100% sure that the sales were directly as a result from the marketing.
Nowadays analytics and tracking provide you with all the data you need to avoid that vagueness. If you have used tracking or special campaign codes or landing pages, all of these let you know exactly what the results of your campaign goals were.
It’s even possible nowadays with some of the new technology coming along to measure more qualitative things like brand awareness and customer perception. At Mykidstime we have worked with parents to give insight and feedback on brands and products, in ways that help inform future campaigns.
When setting your campaign goals, think about what you and your business want to achieve with this specific campaign.
- Do you want to create awareness for a new product or service?
- Is your campaign objective is to capture new leads?
- Are you designing a campaign to drive sales?
Choose whatever goal is most relevant to your business. Then, select the Key Performance Indicators (KPI) that are especially relevant for measuring your marketing activity in that campaign.
You’ll also need to know exactly what data you want to collect to measure each KPI, where the data is stored and how you are going to measure these KPIs. So for example, if your KPI is all about capturing new leads, where are those new leads going to be stored so that you can count them after the campaign is over.
Tip: By setting your campaign goals and ensuring all the tracking you need is in place before your campaign runs, you can confidence in the results.
Recommended Reading: Why You Need Landing Pages for Your Business
#3. Measuring Allows You To Compare and Contrast
If you run campaigns across the year and measure each one against key metrics, then you can start to see how different campaigns compare.
So for example, if you run a campaign in the fall to generate leads and another one in the spring time because you have the metrics and can measure the leads that were generated on foot of each campaign, you can easily compare the two.
Or if you use A/B Testing on your mailings to show two different versions of an email to different segments of your list you can see if one version works better than the other.
Or if you run a campaign and push it out on 3 different social media channels using different tracking links for each, you will be able to compare and see which channel referred more leads. This then lets you adjust your future marketing to use the most effective channel.
Without measuring you can’t compare and contrast and then tweak or change your marketing.
Tip: Most mailing software solutions allow A/B Testing on emailings so try a simple test of 2 different Subject lines on your email to start with, to see if one subject line gets a better open rate.
Recommended Reading: 10 Key steps to Develop a Kickass Marketing Campaign
#4. Measuring Allows You To Adjust and Iterate
As I have mentioned, marketing is an ongoing, iterative process. Measuring allows that iteration to take place in a smart way. So as you measure each campaign, you will have information that informs decisions on the next campaigns you run, and you can tweak and adjust those as you go.
You might start each year with your marketing plan set out for the year, accounting for your business’ seasonal activity, setting out goals and targets for campaigns, defining where and how you plan to run your marketing campaigns. But as you go through the months, each time you run a campaign you should look at the results to inform what you do next.
Constantly measuring and adjusting means there’s no waste, your marketing will keep itself lean and mean as a result.
Tip: Keep a shared Google doc where you log each campaign’s targets, results and add notes on what worked and what didn’t. Then refer to your annual plan and tweak it for future activity based on what has worked well.
#5. Measuring Allows In Depth Analysis
Most businesses probably do look at some basic things for measuring your marketing but it’s worth getting into some deep analysis too. For example, do you know your CPA and your LTV and your CC?
Let me explain.
So firstly CPA is the Cost Per Acquisition. Do you know how much it costs to acquire a new customer? CPA is something most businesses wouldn’t know if you asked them, but if you don’t know how much each new customer costs, you’re just throwing your marketing money away.
So start to do some analysis on how much it is costing you to acquire customers, an easy starting point is total marketing spend / number of new customers over a time period. But then dig into which marketing campaigns and channels are delivering new customers at a cheaper rate. This will let you then adjust your marketing to focus on the channels and campaigns that deliver more bang for each buck spent.
Next up, LTV is your customer Lifetime Value. Do you know what your Customer Lifetime Value is?
So often businesses look at the results of a marketing campaign in terms of – well we spent 1,000 on a particular campaign and we gained 10 customers who each spent 25 euros – total sales were 250, so that campaign was clearly a failure.
But if each of these new customers stays with you for the next 3 years spending a total of 300 each year, then the total potential revenue from that marketing campaign is actually 10×300 = 3000. That would be a good campaign!
CC or Customer Churn is when customers leave you. Do you know what your customer churn rate is? So for example, every year how many customers do you lose? And do you know at what stage of the business/customer lifecycle they tend to leave you at? It’s important to know this so that you can make sure you are acquiring more customers than the churn.
Measuring these types of in-depth metrics will really assist you in building a long-term business.
Tip: Set aside some time to work out these in-depth measures, the time spent will be worth it in terms of really informing your business.
What Happens if You Are Not Measuring Your Marketing?
While not immediately fatal for your business, you will eventually get left behind by your competitors. You will be investing your marketing time and money blindly. There will be no way of really knowing what activity is giving a return on that investment.
- How will you know what is working and what is a waste?
- What information will you use when planning future campaigns?
- Where will you get data on what influences your customers’ purchasing decisions?
- How will you and your business respond to the market in order to drive future sales?
After all, you wouldn’t pay for your business cards if you didn’t know that for every 10 business cards you handed out that you would get an enquiry?
Or you wouldn’t pay for your industry association membership if you didn’t know that it would result in a certain amount of referral business?
Like every other thing you spend money on in your business you want to know that the money spent hasn’t been wasted, so why should your marketing spend be any different?
Recommended Reading: Why List Building is Crucial for Your Business Success
If you’d like to find out how to run a Kickass Marketing Campaign, then check out our online course!
How have you been measuring your marketing ROI? What challenges do you face? I would love to hear your thoughts in the comments section below.