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Introduction to Marketing Measurement & ROI

Return on InvestmentI hear this question a lot: what’s the ROI?

ROI being Return on Investment.

A fair question when you’re talking about marketing. Actually it’s something us marketers like to hear. Mostly because it means our clients are thinking of marketing more as an investment and not just a cost. More commonly the question is phrased as ‘what sales are we going to get from doing this?

And that’s often where the conversation stalls, because not all marketing is about getting a sale. Particularly when you are selling complex products, such as a professional services, consultancy, or an IT solution.

Anytime your product requires some serious thought by the customer, before (and after) a sale, you have a long buying cycle and need to tailor your marketing and how you measure its success accordingly.

So what does this mean to the man on the street, or your average small and medium sized business marketer?

Primarily it means if you want to measure the success of your marketing, you first need to plan out your marketing objectives.

For example, do you need more sales leads, or do you need to increase the conversion rate of those leads to sales?

If you generally find getting leads the easy part, but actually closing those leads is where you fall down, your measure is not going to be getting more sales leads. You need to identify an appropriate marketing goal before setting your measurement criteria. In this instance,  you might focus on improving the sales conversion ratio, not on getting more leads.

With a set of objectives in place, you can actually define a marketing plan, with an appropriate set of tactics and measure. Without first of all defining what the marketing challenge is, you can’t create appropriate objectives, a targeted plan, or sensible measurement criteria.

With tools like Google Analytics or Nimble CRM, you can start to get a picture of where you need to improve your marketing really quite quickly.

Of course there are some simple metrics you can employ to help you define if your campaigns are successful too. For example, simply looking at the number of sales leads from a campaign is a starting point. If you want to get a bit more granular with your marketing measurement, here are a handful of suggestions for you to think about:

Objective:
* I need to get more leads into the top of my sales funnel

Measure:
* Grow my email marketing optin list by 25%
* Improve click through rates on my email campaigns by 20%
* Increase the click volume and click through rate (CTR) on my Google Adwords campaign by 10%
* Improve my organic search rankings to appear on the first page of Google for 10 target keywords

Objective:
* I need to move more leads through to the point of sale

Measure:
* Increase number of event attendees / webinar views by 10%
* Increase volume of contacts receiving email newsletter by 20%
* Improve traffic volumes to targeted web pages by 15%

Objective:
* I need to close more sales leads

Measure:
* Reduce unqualified sales calls by 50%
* Increase sales conversion ratio by 20%

Objective:
* I need to make sure my customers stay customers for longer

Measure:
* Reduce the number of calls to my help desk by 10%
* Increase traffic to self service forum by 25%
* Improve ticket resolution by 10%
* Increase number of customers buying more than one product / service by 15%

Of course once you have these objectives and measures in mind, you can then define your marketing tactics. To reduce call volumes to your help desk, your tactics might be to add a detailed FAQ page on your website, or train your support staff to ensure queries are dealt with on the first call.

In my opinion you should all start thinking of marketing measures and ROI as more than just a volume of sales leads. Look at your sales cycles, measure where you need to improve, define some metrics, plan and run your marketing and then assess. It’s the classic closed loop:

1. Define marketing objectives
2. Plan your strategy
3. Execute your marketing
4. Measure the impact
5. Feedback and revise marketing objectives

  • http://www.founduhere.de Dirk Schmid

    Thanks for the post. I agree, it’s very important to set goals before starting any marketing campaign.

  • http://onlinebusinesspatented.blogspot.com wahyu

    ROI is a must. When you definite your business the first you think is how to get ROI, the rest is handling by auto system that build from marketing plan it self. If not work then simply try another plan when your capital still stay.

  • http://www.ventilationandfiltration.com Anonymous

    Nice Post About ROI.. very informative

  • http://dailytheta.com/advanced-courses/109--81-iron-condor-credit-spread.html James J.

    ROI is HUGE! I think a a lot of people focus on the non ROI items or convince the thing they are working on is a ROI related item. I heard that you should spend about 80% of your time on the ROI things and they should trump the non-ROI items for the most part. Thanks for sharing.

  • http://www.airmaxindia.com/frl_unit_jon.htm Anonymous

    Using ROI also helps you justify marketing investments. In tough times, companies often slash their marketing budgets – a dangerous move since marketing is an investment to produce revenue.

  • http://www.airmaxindia.com/pneumatic_cylinder.htm Anonymous

    Most marketers are at the very least familiar with this level of measurement. Audience can be measured through “likes”, mentions, re tweets and shares.

  • http://www.airmaxindia.com/pneumatic_valve.htm Anonymous

    ROI calculations for marketing campaigns can be complex — you may have many variables on both the profit side and the investment (cost) side.

  • http://www.case-iphone.com Sharon

    Really interesting article. I think it is important to always think of the ROI when undertaking any task and too many people in the Internet marketing sphere fail to do so to their cost.

  • http://www.binary-brokers.com Vernon Lees

    Really interesting article. I think it is important to always think of the ROI when undertaking any task and too many people in the Internet marketing sphere fail to do so to their cost.

    With any activity you really need to define what your end objective is and what is the cost (in terms of time, money etc).

    Although many people won’t do this as they feel the planning can take to much time, there is a subtle irony in that it is proven to be more time effective than simply heading straight into tasks that offer little real payback.