While return on investment is a powerful metric, only few marketers are able to measure it well. ROI is the most important metric that decides a marketer’s performance. According to a survey, only 39% of businesses are able to measure it the right way. Another survey found out that almost 71% of marketing campaigns fail to meet goals. More often than not, there are two areas of disconnect, knowing what to measure and how to measure it. The pressure from the top management will only increase because they expect to see business results and measurable return. They expect marketers to bring effective value to the table and highlight marketing as a strategic financial asset.
Some of the main challenges in proving marketing ROI include attributing social and content to revenue, aligning KPIs to business goals, attributing leads to revenue, gathering and analyzing the right set of data, lack of reliable data, determining the right KPIs to measure, lack of technology resources, lack of expertise, navigating the post cookie world, tying social activities to business outcomes, engaging buyers in a competitive media landscape, implementing the right marketing effectiveness solution and the like. Marketing leaders need to start gauging their business’ potential to measure ROI and then identify and alleviate any roadblocks to success. They need to speak about their numbers and data in a way that is understood by the key stakeholders and can help the company make informed and critical business decisions.
So, how is ROI calculated?
- ROI= (Cost of Investment / Net Return on Investment?) ×100%?
Look at these statistics to understand why marketers are struggling with proving ROI:
- 37% don’t mention financial results when asked to establish ROI (source: IAB/Columbia Business School)
- 57% don’t base marketing budgets on any ROI analysis (source: IAB/Columbia Business School)
- 28% of CMO’s revealed that their decisions are formed on gut instinct (source: Edelman)
- 80% feel challenged by the size of data they need to deal with and the hassle of accessing it. (source: Forrester)
- 81% of marketers would boost spending on digital, mobile, and social channels if they could track their ROI (source: Fact Browser)
- 52% of marketers shared that there are problems in accurately measuring ROI and that’s their biggest source of frustration in social marketing. (Source: Adobe )
- 39% admit they cannot convert their data into actionable insight (source: IAB/Columbia Business School)
- 37% aren’t able to measure the value of social media (source: Econsultancy)
- 24% say determining any kind of cost-benefit analysis is a challenge (source: McKinsey)
- B2B CMO’s say demonstrating ROI is their top concern; yet fewer than 20% say they have the ability to measure it (source: Forbes)
Maximize ROI ; Best Practices
- It’s important to avoid vanity metrics because they can mislead you into determining your ROI like page views, email subscribers, leads in sales funnel, total customers acquired, monthly revenue per customer etc. Instead focus on actionable metrics which are pivotal indicators of your business like converting users, conversion rate, customer lifetime value, customer acquisition cost, email opt-in conversion rate, cohort assessment of sales funnel and the like.
- Leveraging data is critical for your ROI because it helps you understand what your customers are looking for and need. Due to constantly changing customer behavior, marketing loss touched an all time high, but it can be reduced through a 360º view of all of your data. Collecting data and analyzing it lets you assess what’s working, what isn’t and the next steps. In fact there must be a good data strategy that aligns with your business goals. Use data to extrapolate needs, demands, expectations and interests of your customer and their behavior. You can discover the customer expectations through surveys, developing customer personas, social listening, touchpoint maps, journey maps, predictive analysis, segmentation etc.
- Tools and technology should be used to maximize ROI. CRM systems have become omnipresent and essential technology for modern marketers. Ensure that every campaign has a tracking code, measures some results that can be quantified (leads if not revenue). And ask your team to include variable budgets in your CRM system.
- Some research recommends that the average buyer touches 10-20 pieces of content before making a buying decision. “Multi-Touch Attribution” can help assign value across multiple campaigns. This could require special tools and skills, but some common approaches are “first-touch” (assigning all value to the first campaign that touches a buyer), “last touch,” or “weighted” where some level of attribution is applied across all marketing campaigns that touch the buyer.
Maximizing ROI isn’t that difficult to accomplish provided you have your business goals aligned with your efforts. With careful planning and by implementing well-curated strategies, you will be able to yield enough ROI as a marketer to drive your business success.
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