Marketing is a big spend for companies. In fact, it is estimated that global spending on marketing communications will reach $2.1 trillion this year. But does marketing actually work, and is all that money worth it?
Return on investment (ROI) is an important metric used to determine the profitability of your business expenditures. Like any business owner should, you want to know what the payoff is for the investment you’ve made in marketing. We get it.
Is your hard-earned money spent to market your business actually bringing in new customers? How do you track something that can be as intangible and elusive as digital marketing (i.e. website, content, graphic design, email campaigns and social media) or brand, or even professionalizing your materials so you look legit to your target market (again, brand)?
Measuring ROI in marketing may seem tricky, but it’s not impossible. It’s important to establish a clear process that allows you to track your marketing efforts to help you determine what’s working and what’s not.
Before you can start measuring ROI, these are some of the questions you should consider:
- What is my marketing objective? Is it brand awareness, conversion, client retention, professionalization to legitimize my company, etc?
- What is my customer acquisition cost?
- What is the lifetime value of a client?
- Can I provide a baseline measurement of marketing activity?
- What is my budget?
At Fuse, we want our clients to be confident in the investment they’ve made in marketing, so we put a high priority on tracking your results. Many of our clients come to us after being burned by other agencies that did nothing other than leave them with foundational debt. Here’s how we help our clients track their marketing tactics, measure results and reverse that debt.
- Identify your objectives. What do you want to accomplish? Keep in mind that if this is your first attempt at a coordinated marketing effort, the first six months will be all about establishing brand awareness (design, messaging, impressions, comments, word of mouth, etc). Once you’ve done that, it’s time to start looking at conversions and sales.
- Establish a baseline. To measure anything, including marketing ROI, you must have a starting point. Tools like your CRM and Google Analytics can help you get a baseline for tracking followers and customer acquisition cost. The goal is to get as close to or lower than the industry average cost for your campaigns.
- Give it time and stick to your strategy. Once you launch a campaign — email, Facebook ads, Google ads, etc. — plan on giving it a minimum of six months to establish your strategy, test your tactics and get the ball rolling. After six months, start looking at the cost of your campaigns and the work you’ve done vs. the results you’re getting. (While the goal is always to get fast results, human nature and testing of different tactics can sometimes mean that it may take longer than six months to start seeing results.)
- Know the roles. What roles do you need for your internal marketing team? Are your sales and marketing departments working together? Do you have set roles and procedures for those involved in your marketing efforts? Is your team using a CRM effectively? How consistent are your people in executing on your strategy? Have you developed a constant feedback loop? These are all things that play into not only the long-term success of marketing, but of your entire business.
- Dig deeper. For campaigns that are measurable, such as digital advertising and communications, make sure you look at more than just vanity metrics like open rate, followers and click-throughs. While these measurements are important, and are definitely good starting points, they are just skimming the surface. You must have a working CRM to know where your leads and new clients are coming from.
As part of your sales and marketing processes, you’ll most likely have a mix of qualitative and quantitative measures that you’re following; the key is to make sure that you’re tracking both. For instance, when a salesperson hears that a new client was first introduced to you through a LinkedIn ad, that needs to be tied back to the quantitative metrics that you’re tracking.
Always remember that ROI for a small business looks different than it does at the corporate level where they have large, specialized marketing teams. Be careful not to compare apples to oranges. Let Fuse help you develop a customized marketing strategy that produces measurable results.