An introduction to getting a better return on investment from your marketing
Marketing your business is a crucial endeavour to ensure its success – it also calls for constant investment.
To make sure your outlay is returned in revenue, it’s essential to closely monitor your marketing activity and measure its effectiveness. How else will you know whether it’s working or you’re effectively burning cash on the regular?
Proving return on investment is something that can really weigh on the shoulders of marketers: the 2018 CMO Study found that 60 per cent of them felt under pressure to prove the value of their work.
But it’s not easy.
Return on investment can be measured in many forms – the most obvious and quantifiable being monetary.
Sales figures are, of course, where marketers and their bosses primarily want to see the fruits of labour appear. It means that campaigns have resulted in spend and therefore done the job intended.
However, return on investment (ROI) isn’t purely about the immediate materialisation of cold hard cash – there are lots of other types of returns that are super valuable to businesses. Think improved customer loyalty, better data collection, enhanced customer satisfaction or the expansion of your audience.
All of these things are important to the success of your business and, in the long term, will also translate into revenue. Some businesses will refer to these non-monetary gains as key performance indicators (KPIs) until they actually translate into cash, though.
By monitoring and recording your marketing ROI – in whatever form makes the most sense for your business – you’ll be able to make better informed decisions about which types of marketing work best for your business, allowing you to invest with confidence.
Use this guide to learn more about getting a better return on investment from your marketing, then follow our dedicated action plan to inform your improvement efforts.
Things to consider when assessing your marketing ROI
What you count as marketing spend
To work out if you get a positive ROI, you need to define the ‘I’. In other words, it has to be clear exactly what you consider to be an investment.
For instance, the fee for placing an advert is a very neatly packaged figure. But what about the time and resource spent researching where to place the ad, organising the booking and, potentially, creating the ad itself – if you do this in-house.
Perhaps certain campaigns will require staff to up their contact time with customers, answer more queries or put in more hours.
So, what’s marketing cost and what’s not? It can easily get blurry, so decide early on what financial input you’re going to be measuring your return against.
How you measure returns
The most traditional way to measure return on investment is perhaps using profit. Subtract the investment sum from the profit, divide by the investment and multiply by 100. You’re left with a percentage that shows how much your investment cash grew – anything over 100 per cent is a gain, and anything less a loss.
Of course, if you’re not aiming for immediate sales through your campaign, you can measure things like the number of new leads created, or website traffic stats. It’s up to you to choose the most insightful and valuable metrics for your business, in order to get the most out of the practice.
“When you’re growing, look at where you can get quick wins – and then plan out long-term goals carefully.”
Hannah Dawson, founder of Futrli
The cold hard facts
Influencer marketing is a real area of growth. A 2020 report by Statista, which focused on retail marketers in the UK, Germany and the US, showed that 79 per cent of respondents had increased spending on influencer marketing that year. This is unsurprising when you consider two-thirds reported it to have a better return on investment than traditional campaigns.
Common mistakes with trying to improve marketing ROI
Measuring ROI too soon
It’s tempting to start trying to measure a campaign’s success almost instantly, to work out if anything needs tweaking or if it’s going to plan. But doing this can hugely distort the results of your marketing activities.
Recent LinkedIn research showed that 77 per cent of those in the digital marketing space measured returns after only a month despite 52 per cent of that group knowing that the company sales cycle was at least three months
There is a reason for this impatience: the same research showed that 58 per cent of digital marketers reported that they needed to prove ROI in order to secure future budgets. But they’re not going to get numbers that reflect the impact of the campaign after a mere four weeks – it’s just not realistic to see the full effect by then so the measurement is nigh-on meaningless.
Not having a coherent strategy
To achieve great ROI on your marketing investment, the game plan needs to be tight. It’s important to have a proper strategy in place, be clear about what you want it to achieve and plan how you’ll measure it. All of that should be happening before kick off, otherwise the campaign will likely be flabby and directionless. Neither of which are qualities that generate great ROI.
For instance, if you don’t know who you’re targeting, you won’t know the most effective channel to market to them through or how to best engage them.
Experimentation is great, but the goal – and proposed pathway to it – still needs to be clearly defined.
“Nobody knows your brand like you do. Honesty and authenticity are the only effective marketing techniques. Ensure that everything reflects that, and you’ll see results.”
Nimisha Raja, founder of Nim's Fruit Crisps
The cold hard facts
This question will have different answers depending on your business, your target customers and your investment. But a global survey by Statista in 2017 found that, in terms of digital marketing, SEO, content marketing and email marketing were reported by marketers to generate the best ROI.
Quick wins for improving your marketing ROI
Define your goals so you can measure effectively
Get specific about what matters to your business, and create your ROI metrics that way. This will not only mean you’ll enhance the potential benefits to your business, but it’ll allow you to fine tune your approach and tweak campaigns as meaningfully as you go.
The more you drill down into the metrics the more you can pinpoint specific areas of your campaign’s success, and rethink what doesn’t seem to be working so well. All with your end goal in mind.
Experiment with different channels
Make a list of all the different channels you currently use or have already tested for marketing. How does it compare to the below?
- Content marketing (writing a blog, for instance)
- Social media (including Facebook, Twitter and Instagram)
- Pay per click ads (like Google Ads and sponsored posts on Facebook)
Note down any gaps and consider some experimentation – it might be that instead of increasing investment to reach more people, you just need to adjust the channel you’re using.
Identify the target customer for your campaign
Skip this step and you’ll be stuck in the trap of trying to appeal to too many people, spreading your efforts too thinly across different channels.
By taking the time to consider exactly what kind of customer you’re trying to target with your marketing campaign, you can make informed decisions on everything from tone of voice to visuals, advert types to which social media platforms to invest in.
Make sure your money is being spent tactically and purposefully.
“Your customers are the fuel for your business, so make sure you’re communicating with them.”
Danny Scholfield, sales director at Expert Security
The cold hard facts
Personalisation is big news in marketing and, as Statista found in a recent survey, 26 per cent of marketers reported that every dollar they spent on personalisation achieved an ROI of between three to five, while nine per cent saw this ROI reach heights of $20 per $1 investment.
Now you’ve learnt about ways you could improve your marketing ROI, use our action plan to direct your next steps.