How Often Should You Track ROI?
When it comes to digital marketing, there’s certainly enough data and tracking capability to be monitoring ROI on a continual basis. You should regularly check your ROI to ensure that you’re making progress in the right direction. However, monthly checks only provide part of the picture. Month-to-month tracking doesn’t account for seasonal changes or other abnormalities in your data. A better way to know where you stand is to make year-over-year comparisons. This allows you to see the full picture and spot how your digital marketing campaigns are improving over time. Given the “unusual year” we had in 2020 with Covid, it may even be a good idea to track 2021 data against 2019.
Why Do Your Overall Goals Matter?
Campaign goals matter a great deal because they have a direct impact on what your tracking techniques should be. You should use different methods to measure your social media, digital advertising, and even search engine marketing ROI.
If you haven’t already, define your digital marketing goals. Do you want to increase conversions? Is your goal to build awareness, or to get customers through a content marketing funnel to download your latest informational whitepaper? Identifying these goals will help you determine what you need to measure to determine your ROI.
What Do You Use to Measure ROI?
Overall goals factor into what parameters you should use when you measure ROI, but you should also factor in the marketing channels you’re using. There are some great tools for marketing across the board, and more specific tools that can help you with marketing for email or social media. In this section, we’ll talk about tools that can help you measure ROI and then what to measure for each channel.
Google Analytics is a fantastic ROI measurement tool - so much so that we have an entire section devoted to it below! Another marketing tool that can come in handy is Cyfe, which can add widgets to help you track activity across multiple sources - from advertising, blogging, email, sales, SEO, social media, and web analytics.
Social Media Marketing
Hootsuite helps you manage social media pages on one platform and even has a social ROI calculator to help you find out what the return on investment you’re getting from your social media campaign.
Sprout Social is another helpful platform that not only helps you post to social media sites but also measure social media metrics. It can show you where your high-engagement content is, your low-performing content, how many clicks you’re getting, and more.
For social media, we use a similar platform called WSI Social (PromoRepublic). That has all the same features as the tools listed above!
Overall, we suggest you know your engagement rate, click and click-through rate, conversions, leads, and new fans or followers (for starters).
Search Engine Marketing
SEMrush allows you to find your website’s organic traffic insights, including the number of users, sessions, pages per session, bounce rates, and how many goals you’ve completed (as well as that same data for your competition). If you connect Google Analytics and Search Console to your account, you can get even more details about recommended keywords and what your ideal prospects may be searching for online.
To know how your landing page is performing, you’ll want to know your traffic, unique and returning visitors, time spent on the page, actions taken, and conversions. For blogs, you’ll want to know the traffic, unique and returning visitors, conversions, actions taken, and time spent on each page.
In addition to using SEMrush here at WSI for all of our SEO and digital marketing projects, we also use CrazyEgg to help track where all of the engagement is happening on the site - from clicks with the mouse or taps on a mobile screen.
SharpSpring enables you to calculate your email results and ROI. Once you’ve got that, you can determine your revenue, profits, cost per conversion, cost per opened email, and ROI. To check your email marketing ROI, gather info on your send volume, average conversion value, open rate, click-through rate, unsubscribe rate, leads acquired, and campaign cost.
SharpSpring not only helps you track email activity, but the added bonus of tying it all back to website activity so that when people open and engage with email, they are also being identified to see what other engagement activities they take on the website after the email is clicked!
Measure Your ROI with Google Analytics
Cost Per Lead
If your goal is to collect new leads for your sales team to close, you’ll need to know your cost per lead. To find this number, divide the total amount of your ad or campaign spent by the total number of leads that are attributed to your campaign.
Using the conversion metrics will help you track your ROI… if you know what you’re looking for. Start by checking your conversion rates by channel and then invest in those channels to ensure your marketing resources go farther. You can also check conversions by device and adjust accordingly.
Lead Close Rate
Check your lead close rate against the leads that you’re generating to know how profitable your marketing efforts are. To determine this ratio, divide the number of sales by the number of leads.
Cost Per Acquisition (CPA)
CPA helps you determine how much it costs to get a new customer. Divide your total marketing costs by the number of sales generated by the campaign to get your CPA.
Customer Lifetime Value
A customer is worth more to you than first meets the eye. For example, if it costs you $10 to find a customer who made a $10 initial purchase, it may seem that you broke even. However, that’s the tip of the iceberg. Your customer will likely purchase more in the future.
About 60% of customers will be profitable, with 20% of your customers falling into the “very profitable” category and another 20% that are not profitable. A better understanding of lifetime value will allow you to look at the bigger picture.
Average Order Value (AOV)
AOV helps you track the average dollar amount that customers spend on an order. Divide the total revenue by the number of orders to get your AOV. To improve your AOV, it might be as simple as improving the customer experience or introducing cross-selling opportunities.
Let's Put It All Together With An Example
Let's say 1,000 people click on an ad and 100 of them fill out a form and become a lead. If we spent $5,000 on the campaign to get 100 leads, that's a CPL of $50.
Since 1,000 clicks became 100 leads, that is a conversion rate of 10%. If 5 of those 100 leads end up becoming a customer, that's a 5% LCR.
Finally, since it took $5,000 to get 5 new customers, the CPA is $1,000 per customer. If that customer ended up getting a new home mortgage, chances are the lifetime value of that new relationship is way more than the $1,000 that was spent to acquire them - so, you have a nice (and positive) ROI!
We’ll Teach What You Need to Know
Is this information making your head spin? Need more actionable steps on how to measure your digital marketing ROI? Watch the recording of our webinar “5 Must-Haves for Measuring Digital Marketing Success” below! P.S. There is a free competitive analysis included... Make sure you watch until the end
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