As a business owner, you must be able to measure your marketing return on investment (ROI). Simply put, your ROI is the return you obtain from investing in marketing growth. Measuring your ROI also measures the actual performance of your marketing campaign, both online and offline, which will in turn influence how much you spend as well as the strategy you adopt. In other words, calculating your ROI in marketing will give you a good idea of how your marketing strategy contributes to the overall growth of your business or organization. If you have been considering hiring a digital marketing company Santa Rosa, here are some facts about ROI you should know.
Reasons to Calculate Your Marketing ROI
If you’ve never measured your marketing ROI, you may be wondering why you should start now. For one reason, there are numerous benefits associated with calculating your marketing ROI. Many of the following benefits can have a major impact on your company’s financial bottom line.
Measuring Your Marketing ROI Helps You Determine What is Working
When you calculate your ROI, you will begin to notice what digital marketing strategies are effective. If you don’t measure your ROI, it can be hard to tell if your strategies are working. By understanding your marketing ROI, you can understand what drives your company’s sales. You can also use this information to improve your marketing strategy and overall results.
Calculating Marketing ROI Can Help You Decide Where to Invest
When you regularly measure your marketing ROI, you will learn what marketing strategies are effective and which ones are not. You can use this information when deciding on a budget for your marketing campaign. If one approach isn’t working, you can get rid of it and try another more useful one. Over time, calculating your marketing ROI can actually save you money.
Measuring Your Marketing ROI Helps You See How You Compare to Your Competitors
Wouldn’t it be great if there was some way to gauge how you compare to your competitors? Fortunately, you can do this by measuring your marketing ROI. The calculations you obtain can help you determine how you perform in terms of your industry, especially since many publicly-traded companies make such information public. When you have an understanding of how you stack up against others, you can manipulate your strategy to better reach your goals.
Calculating Your Marketing ROI
You can easily calculate your marketing ROI by subtracting your investment from your return and dividing it by the investment again. While the previous formula is relatively straightforward, it may not be your best option. To calculate your marketing ROI more accurately, you can use the following formula as well:
[(Number of leads x Lead to customer rate x Average sale price) – Cost for marketing] / Cost for marketing
This formula is slightly more complex, and to effectively use it you will need the following information:
Once you accurately calculate your marketing ROI, you can begin to see how it impacts your entire business.
What is a Good Marketing ROI?
Since you are now capable of calculating your marketing ROI, you may be wondering what a good ROI is. In general, a good marketing ROI is 5:1 or $5 for every $1 spent. An exceptional ROI is 10:1 or $10 for every $1 spent. The previously mentioned figures, however, are general, and a good ROI for your company will depend on a variety of factors such as the industry, margins, and overhead costs. A great ROI for one company may not be so great for another.
How to Improve Your Marketing ROI
There are ways to improve your marketing ROI. Many of these ways are relatively simple, so employing them may be worth it from a financial perspective. You can boost your marketing ROI by taking the following steps:
By regularly measuring your marketing ROI and experimenting with various elements of your campaign, you can boost your ROI.
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