Measuring the Return on Investment (ROI), i.e. the
contribution a particular marketing operation renders on profit and revenue is
the holy grail of marketing measurement.
A friendly reminder: this post is not about flabby metrics
like eyeballs and views. We'll only discuss quantifiable evidence indicating
towards real outcomes.
Within a company, the marketing department is often
inundated with questions revolving around marketing campaigns and the Return on Investment they
delivered, if at all they did. While it's easy to ask such questions,
determining a substantive answer can be difficult.
Why, you ask? Simply because:
- It's tough to know when to measure: Any investment on any particular day will have an unique impact at any point in near future. A marketing campaign can deliver results two days from now, or two months later. Nonetheless, marketers must know when to invest and where to invest.
- Extrinsic factors: There are numerous variables that are not with the marketing department's control. What would the marketers claim if revenue increased owing to rising economy, did their campaign delivered the increased ROI?
To better understand marketing ROI, let's first understand
what a company aims at. Once we know we wish to obtain from marketing
campaigns, only then can we measure the returns. Some of the Key Performance
Indicators KPIs in digital marketing campaign are mentioned
below:
- General indicators: it includes traffic, reach and leads
- Indicators based on channels: search engines, website, social media profiles, blogs, etc.
- Indicators based on performance: it includes click throughs, lead generation, conversions, etc.
Think beyond outcome measures
Understand the complex set of activities that positively
affect the ROI. This is the first step for measuring marketing ROI.
Suppose that you're facing difficulties with customer
satisfaction and retention for any possible reason.
In such a scenario, if you focus on developing a social media community, the only thing I can imagine is an unruly bunch of unhappy
customers wreaking havoc on your social media platform.
Only measure what matters
Like I said above, likes, views, and clicks are not the most
important aspects of your digital marketing campaign.
You need clearly defined goals for your digital marketing
campaign; goals that run deeper than mere performance measures. The next step
would be to create KPIs associated to such goals and measure the KPIS in their
entirety.
Metrics alone are not enough
Creating dashboards that display the metrics is futile. This
is because statistics require skilled interpretation and don't speak for
themselves.
Also, different users would be requiring different level of
analysis. As such, an effective dashboard allows the users to delve further
into the metrics for maximum insight.
Once you've generated meaningful metrics, the next step
would be to
Tie compensations to metrics
It's important to do so because it makes sure that you don't
face difficulties converting metrics and insights into actions. It also ensures
that the employees collectively work towards the direction suggested by these
metrics.
This process, however, requires a 3-point approach:
- Balance of compensation
- Compensate metrics related to marketing ROI
- Metrics shouldn't be affected by extrinsic factors
The Bottom Line
'Half of the money I spend on advertising is ruined;
troubling is the fact that I do not know which half' - John Wannamaker
This was said late in the 1800s. So to say measuring ROI is
something new or unique to digital marketing only, would be misleading.
Now in 2017, when the world is brimming with all sorts of
avant-garde utilities, measuring the ROI is still quite a daunting process.
However, marketing is essentially a vital part of a business
and if done right, can pay many times over what it costs. Don't just give in
for softer metrics if you need to make the most out of your marketing spend.
Brands Martini is a full service digital marketing
agency in Delhi comprising of digital marketing geeks and experts,
providing customized marketing solutions.
Article Source: EzineArticles
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