The ROI is simply the return on investment, and the goal of any business is to push their ROI as high as they possibly can. The reason why measuring marketing ROI is important is because without knowing what it is you aren’t really aware of how successful your business is. Turnover alone isn’t a good enough indicator regarding the success of your business, you must pay attention to ROI because it indicates profit, and that is the important indicator of how well you are doing as a business.
How to Measure ROI
There are many forms of marketing and knowing how to measure the ROI of each one is not straightforward. For PPC campaigns such as Adwords because of how well you can track everything you can actually arrive at figures where you know exactly how much you put into the process and how much you get back in the form of sales.
However, for other forms of marketing such as creating content, or doing social media posting it can be much more difficult to know how much effect it is all having. What you could do is look at each form of incoming traffic that you have, for example, take a look at all of the incoming traffic to one article, and then see what that traffic does. Any sales that are generated as a result of people arriving to a specific article can be attributed to that article as making sales.
Such in depth analysis of knowing where your sales are coming from allows you to know the marketing ROI regarding the different types of investments that you are making. For example, if you find that social media is giving you a negative ROI then you must change your strategy with that form of marketing. And if you come to realize that certain types of articles have a high ROI associated with them then you know that you must increase your output for those types of articles.
Such micro-analysis of the different types of incoming traffic, and how it affects your profit margins is important, and certainly much better than simply looking at how much you are spending overall, and how much is coming back in the form of sales. The more detailed you are with your analysis the better your marketing strategy will become, and for more information on how to create a marketing plan read “How to Set a Marketing Budget”.
Marketing ROI Calculators
Online you will find a number of websites offering you marketing ROI calculators that allows you to figure out some of the basics such as your ROI and profit. Not all the calculators will be useful for you because some simply lack depth, however there are some pretty good ones that have many fields where you can enter detailed information about your business finances and get an ROI figure out at the end of the calculation.
You could do all of the calculations by hand with a simple calculator, but the reason why you should utilize the online marketing ROI calculator is because of the fact that they allow you to save time. Therefore, for practical reasons look into some ROI calculators, and you may find a great one that is free of charge.
Expect Negative ROI
A negative marketing ROI simple means that you have lost money on an investment that you made, and more specifically it means that your business is losing you money. This is actually a very natural part of business, if your overall marketing ROI is negative then it is a big problem, but if you have negative ROI for certain marketing investments that you made then don’t see it as a failure, but instead as a lesson that you needed to learn. For example, with PPC campaigns you might have negative ROI’s for 10 campaigns that you run in a row, this isn’t uncommon, but that is required to figure out how to get to a successful campaign. Once you do figure out a successful one you can simply stop all the ones that were losing you money.
All businesses lose money in one form of another, you might bring in new products into your store that just don’t sell, or you might launch a marketing video that cost you $500 to get done, but doesn’t give you any return. These setbacks should simply be looked as lessons that you needed to learn so that you can make progress. There isn’t a successful business owner alive that hasn’t lost money at some point or another, it happens to everyone, so if you get a negative ROI for some of your marketing campaigns, don’t panic; simply figure out what went wrong and next time try do get it right.
Weeding Out Ineffective Marketing
ROI allows you to figure out what marketing types just don’t work for you, for example the Adwords program is great, and could potentially provide you with a lot of traffic at an affordable cost. However, if you are operating in an industry that is very competitive and many people have already entered the Adwords program then you might be better served doing your PPC at other places such as Facebook.
As explained earlier, some marketing techniques will give you negative marketing ROI in the beginning as you figure them out, but some are just doomed for failure and you will struggle with them for a long time to come, which is why you must check out other marketing options. For more information on the different forms of traffic generation methods visit “What are types of Digital Marketing Traffic?”
The steps required to figure out your ROI mentioned in this article might seem like a lot of work, but it is all about increasing your bottom line. You might find that by paying attention to your ROI figures you can double your profits in the coming months. If you found the information in this article useful and would like more marketing insights then download the “Small Business Digital Marketing Checklist”. It is packed full of great info that will help you push your business to the next level.