7 Quick Tips to Improve Your Marketing ROINovember 20th, 2018 | Posted In Business Advice, Marketing, Online Marketing
Calculating the true return of your marketing investment can be difficult. Metrics like reach and engagement matter, but don’t always connect to actual customers and revenue in a linear fashion. Still, understanding your marketing ROI is core to making sure you focus on the right channels, emphasise the right message, and maximise your potential for success.
At its simplest, you can calculate your ROI as (sales made – marketing cost) / marketing cost. The true formula, of course, is more complex, keeping your internal costs in mind. Focusing on profit over sales always make sense. The nuances of calculating your marketing ROI deserve their own, thorough examination.
As you calculate, you might find numbers that are less than favourable. Don’t ignore them. Instead, take them as an opportunity for improvement. No promotional campaign is perfect, and you always have room for improvement. Here are 7 quick tips you can implement without much effort to improve your marketing ROI.
1. Track the Right Metrics
No results-focused marketing can succeed without a focus on metrics. But at the same time, not all metrics are created equal. Your goal should be finding the numbers that can directly connect your marketing success with actual revenue growth.
That means no more ‘vanity metrics’ like Facebook followers and email impressions. They matter, but don’t predict actual business success. Instead, focus on more essential figures like lead and customer conversions, time to conversion, and customer acquisition cost.
2. Connect Metrics to Revenue
Even the best metrics will have little value in isolation. Wherever possible, try to connect the numbers you elect to focus on to the actual revenue generated. That sounds complex, but is actually simpler than you might think.
Say, for instance, that you know the average customer is worth $1,000 in profit to your business over their lifetime of engagement with you. You also know that about 40% of your leads actually become customers, and 3% of web visitors become leads. Now, you can reasonably estimate that the average lead is worth $400 (40% of $1,000), and the average web visitor is worth $12 (3% of $400).
Standardising these metrics can be more complex. A solution like Google Analytics allows you to attach goal values to conversions, which help you track it more easily. Even better, HubSpot’s reporting tool helps you track your audience from first-time visitors all the way to customers, which makes simplifies the process of connecting metrics to revenue.
Understanding your conversion rates and their value also helps you determine what actually makes a good marketing ROI. The exact answer differs based on your industry and the marketing channels you use. Marketing spend as a percentage of overall revenue also enters the equation.
If, for instance, you spend more on marketing as a percentage of total sales, you will require a higher ROI to make it worth your money and help your company grow. The formula above, (sales made – marketing cost) / marketing cost, is relatively simplistic. Calculating your marketing ROI is a complex process, but assigning values to your individual conversion and funnel steps is absolutely crucial.
3. Leverage the Power of Automation
Speaking of HubSpot: the software platform made its name as a marketing automation suite, and that automation can make a significant difference in your marketing efforts. In fact, marketers using automation software generate twice the amount of leads, and are perceived as significantly better communicators, compared to those who don’t.
At its core, automation saves time by removing manual processes like scheduling social media posts and automating emails. But its benefits go far beyond that simple truth. For instance, you can set up nurturing emails that guide your new leads all the way to customer conversion. Nurtured leads provide 20% more sales opportunities than non-nurtured leads, suggesting the ROI benefits of this tactic.
4. Find Your Core Competency
Never underestimate the power of differentiation. Beyond all of the technical backend and metrics, your marketing still depends on a relevant, unique message to convince your audience that becoming your customer makes sense. To do that, you have to find your core competency, and lean into it.
What is the single thing you are best at, that differentiates your business from your competition? Answering that question may require some soul-searching and hard research. But once you know the answer, you can build an entire marketing strategy to accommodate your audience. Even slight message adjustments to reflect that competency can raise their effectiveness and your marketing ROI.
5. Maintain a Singular Focus
Never lose track of the reason you’re running the marketing campaign to begin with. Instead, leverage what Unbounce calls the ‘attention ratio’: every marketing message should be written with a singular focus in mind. The fewer options for distraction your audience has, the more likely they’ll be to take the course of action you need them to take.
That sounds easy in theory, but can actually be quite challenging. The best course of action is to start with your conversion goal before crafting the message. That way, you can make sure every one of the creative elements of the message aligns with that goal.
6. Never Stop Testing
It’s difficult to overstate the importance of continuous improvement in your marketing strategy. There is no such thing as a perfect promotional campaign, tactic, or message. Everything can be just a little better in driving your audience to conversion and improving your marketing ROI. And the best way to leverage those possibilities is through A/B testing.
You might already be familiar with the concept: two slightly altered versions of the same message, pitted against each other. The one performing better allows you to draw conclusions about the ideal image, headline, wording, etc. to use moving forward. A continuous series of A/B tests improves your marketing over time, maximising success and conversions.
7. ABC: Always Be Converting
Finally, and perhaps most importantly: never lose track of your ultimate goal. That matters in terms of maintaining your focus, but also in making conversions to leads and customers as easy as possible for your audience. Never forget about the role conversions play in building your business and its revenue.
That means streamlining the journey to conversion for your audience. Instead of a general ‘contact us’ form, consider individualised landing pages for each marketing campaign. If you’re looking to convert existing leads to customers, build in pre-filled fields to make the conversion more likely. Each message should have a conversion goal attached, but that conversion goal needs to be easy to reach.
A Shift to ROI-Focused Marketing
Gone are the days when marketing departments could spend money, hoping for the best. In fact, those days may have never even existed. In today’s competitive environment, you need to prove that the dollars spent on attracting customers actually do their job.
That means calculating your ROI, but it also means taking simple steps to improve that ROI. And, surprise, it all comes back to your marketing metrics. For help in shifting your marketing strategy to a focus on ROI, contact us.