Whenever we are asked to illustrate the success of marketing campaigns, we are often met with the fear inducing acronym, ROI.
Return-on-investment (ROI) is commonly used in business terms to prove the success of financial investments. Simply, how much ‘return’ a single investment makes.
When it comes to marketing, it can get a little more complicated. In our world of relationships, community building, brand trust and lead generation, the term ROI has come to mean so much more.
In the traditional sense, ROI is focused on financial gain. In marketing, it gets quite murky. What is the gain/cost of developing a brand ambassador? Is your social community providing provable financial gain? Did your Twitter conversation lead to a sale, or was it the email?
The truth is that trying to measure the financial ROI on individual elements of your marketing campaigns is kind of ineffective. But don’t abandon all hope of using metrics and KPIs to measure the success of your marketing campaign. You simply need to understand that revenue and gross profit is not necessarily the right metric to be tracking.
Of course metrics and KPIs are more crucial than ever. But instead of revenue and profit, marketers should turn to goal based KPIs. Metrics that illustrate the success of campaigns in relation to the overall business goals.
For example, If your business goal is to grow your customer base, chances are your marketing goal is lead generation. As such, look at the number of leads your marketing campaign generated as your ROI, don’t look at the number of sales.
That being the case, there are no pre-existing average benchmarks, other than those relevant to the history of your business. If you have previously converted 100 cold leads to warm leads at a cost of $500, use that as a benchmark. Or perhaps your goal is brand awareness. Use the current reach and visitor stats as benchmarks alongside the cost of pay-per-click campaigns. Aim to optimize your campaign and increase on your chosen metric, at the same cost or less. It’s that simple!
Some businesses focus on growth, others on community, and some simply want to exist. Whatever the case, your campaigns should be judged on how they help the business meet their goals.
The truth is every business has unique goals and targets, and should have unique metrics relating to their business goals, to measure ROI.