Have you ever sat in a conference room, filled with top officials of your company and being questioned what’s the ROI of a particular campaign? How often have you been able to provide a satisfactory answer? Have you ever stared blank at them because you do not know what ROI is and how to calculate it? Well, if you have faced any one of these situations, then you are not alone, my friend. Fournaise Marketing Group, found that nine out of ten global marketers lack training in ROI calculation. This is a serious problem for the success of your startup. In this write-up, we understand basics of what ROI is and how to measure it efficiently for your campaigns and venture.
Traditional forms of marketing like TV, print ads etc had their own charm till some years back. But, since the advent of digital marketing, the former media have faded in popularity. One of the main reasons for this is the measurability of what’s being invested in each of the campaigns. How can you accurately measure the worth of your money that’s spent on TV and print ads? However, you can get an exact factor of how your campaign has performed in the digital medium. This factor is what we call as ROI or Return On Investment. Now that we are familiar with this term, let us understand how to measure it.
A lot of marketers claim that half the money that they spent on a marketing campaign was wasted, but sadly, they are unable to track as to which half was it that got wasted. To overcome this challenge, we have certain parameters that help us in calculating the performance of our ads along with numbers that support the argument. Now, to calculate the ROI of a campaign, you need to first define certain goals for the same. These goals are further attributed by KPIs also known as Key Performance Indicators. Your KPIs could be any of the following, depending on what goal you have defined for your desired campaign. Answer these questions to drill down to the right goals.
- What is the overall purpose of your campaign? Based on overall performance, your KPI could be Traffic, Leads or Extent of reach of your campaign.
- Where is your ad appearing? You could further define channels based on whether you want to measure the performance of your ad across website, blog, mobile application, search engines. etc.
- Why are you running the campaign – to generate leads, to drive more traffic to your site, to increase number of views on a video, or to increase conversions? Identify this factor very carefully and you are sure to tread towards success.
- How are your customers landing on a particular page of your website? Is it through organic search, referrals, social media interaction or paid campaigns?
Ensure that you set realistic targets and goals for your business rather than setting super ambitious ones that you know are impossible to achieve. There are various Analytics tools that help in assessing the ROI of your campaigns. They present all the data in one single platform and it is then your job to perfectly extract the information you need from all that data. Google Analytics, Crazy Egg and a few other platforms offer exhaustive data collection and presentation. You may use one of these open tools or design one that’s unique for your business. You may also do wonders with a simple Microsoft Excel sheet as that’s the skeleton of all these sophisticated tools.
Now that you have your KPIs set, we need to keep in mind, certain important factors that may cause obstacles in calculating the correct ROI. So, here are a set of standard rules that you ought to follow to avoid making mistakes while crunching those numbers.
Rule #1: Measure what’s important, not what’s convenient.
It’s always simpler to calculate likes, clicks and other straight-forward parameters that are directly available on the dashboard of your analytics platform. But are those parameters the real deal in achieving your campaign goals? Do they really matter while calculating your campaign’s ROI? So, don’t hesitate to measure what matters for your venture, even if it means extra hours of work and a few extra cups of coffee.
Rule #2: Don’t follow the herd.
We often tend to make mistakes while following the herd thinking, we are doing it right because everyone is doing it. Let’s imagine you start a social media community for your brand just because all your competitors are doing the same. However, your brand attracts lot of negative sentiments from customers. Now wonder, have you done the right thing? All you have done is, provided an additional platform for your customers to rant about their dissatisfaction with your brand and in turn, repelled potential leads for your business. So always do what’s right for you, not what others do. This way, you are sure of getting good ROI as you customized your goals for your venture. Take the control in your hands and provide only what you want to offer to your customers.
Rule #3: All Metrics and no Analysis makes the campaign very dull
It is not enough to simply extract metrics from your account dashboard and presenting it at the board meeting. These numbers need to be further interpreted for what they stand for. Expert analysis will tell you the worth of your invested money and reach closer to the best measure of ROI.
Rule #4: Predict the future
Deep analysis of the data received in your dashboard is imperative. It is essential that you scrutinize the performance of each campaign such that you know what has worked well for your business and what has failed to do so. Design your future goals and aims based on these results and you are sure to improve your ROI.