3 proven tips for measuring marketing ROI
One of the most important aspects of any marketing campaign is the ROI you see from it, but this can be one of the most difficult things to measure. Knowing exactly which interaction converted which lead; knowing which channels to attribute results to; even knowing how to measure results at all can be challenging.
Unfortunately though, measuring marketing ROI isn’t a simple equation. Any number of factors can skew the results, from outside events to in-house shifts in staff or salary. The fundamental question we’re looking to answer when measuring marketing ROI is how we can work out which factors have caused which results; if we can do that, we can refine our strategy based on more of the factors which are working and less of those that aren’t.
On the upside, measuring marketing ROI is getting easier. As our technological ability advances, we’re finding it easier than ever to measure our marketing efforts, giving a more comprehensive understanding than we’ve had previously.
We’ve put together our top three tips to successfully measuring marketing ROI, even if the whole concept of ROI leaves you feeling a bit overwhelmed.
The Right Method
Choosing the right method is the first step to successfully measuring marketing ROI. There are several main methods - each is a trade off between cost and complexity of implementing the method vs. the depth of the insights you get back from it.
The most common method is Single Attribution, whereby the entire value of your lead conversion is attributed to a single campaign that a customer interacted with.
The big advantage to this method is that it’s the easiest to implement, and the cheapest, but it doesn’t give a particularly holistic understanding as it only accounts for the influence of a single campaign.
A step up from Single Attribution is Single Attribution with Revenue Cycle Projection. This method allows a greater depth of insight, as it projects revenue over time using past metrics. Often, as marketers will well know, marketing investments can take a long time to pay off. Without a method for measuring ROI that takes this into account, the results can be unfairly biased towards short-term, quick pay-off campaigns.
Stepping up again we have Multi-Touch Attribution, which has the big advantage of being able to account for, as the name suggests, multiple touch points. As general marketing wisdom has it that the average conversion journey will contain seven touches, the value of this is obvious.
Multi-touch attribution allows marketing to look more closely at lead generation and identify the marketing channels that are delivering the highest ROI, so they can invest more wisely in the future. Saying that, it isn’t a particularly intelligent attribution method, lacking subtlety into how each touch point is weighted – which means it’s easy to over or underestimate the importance of specific campaigns.
Another step up from this method, we find Control Groups. By testing your marketing efforts against a control group you can get a more sophisticated understanding of your marketing ROI. This method can be prohibitively expensive, however.
Finally, we have Market Mix Modelling (MMM) which, while the least used method, is the most accurate and most comprehensive, calling on in-depth statistics to show how a range of factors impact sales volume. It does demand time, effort and an analytical mind though, which is likely why it’s such an underused method.
The Right Tools
After deciding on the method you’re using for measuring marketing ROI, the next step is to choose the analytics tools you need. The tools you choose will depend on the metrics you’re tracking – there are quite literally hundreds of different metrics so you’ll need to decide which are most meaningful to your business. Volume of leads and sales are common metrics, as is website traffic, website traffic source and content engagement levels – shares, comments and likes.
There are plenty of free tools out there, depending on how in-depth you’re planning to go with your ROI measurements. Individual social networks mostly have their own in-built analytics platforms, which is a great first port of call. Going beyond those, Google offers some amazing tools such as AdWords, Search Console and Google Analytics.
As well as tracking online leads, it’s really important to track offline, too – so you can build a holistic, joined-up picture of your marketing efforts. In fact, with a BIA Kelsey study finding that 65% of Fortune500 companies class telephone leads at their highest quality source, tracking your offline leads is almost more important than online.
Ideally you want to measure the volume of calls that your campaigns generate and how much revenue those leads generate for the business, which is where call tracking software comes in. The software allows you to accurately attribute your telephone leads through visitor-level call tracking, so you can determine which campaigns keep the phones ringing and drive your most valuable leads to ultimately increase your ROI.
Don’t jump in the deep end
Measuring marketing ROI can seem overwhelming, especially if you try and implement everything at once. The temptation when deciding on an ROI measurement strategy is to go for quantity over quality, but that simply isn’t the most efficient method. Marketers everywhere are being drowned in data – simply collecting spreadsheet after graph after dataset will likely only confuse the issue.
The real thing to remember about measuring marketing ROI is that data is only important for the insight it gives, rather than having an inherent value. The best bet for businesses starting out in the world of marketing ROI is to really focus on choosing the tools and methods that can deliver meaningful, and therefore actionable insight, rather than throwing mud at the wall. Keep it simple to start with and you’ll have the foundations you need to start building a more complex, comprehensive strategy over time.