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Measuring Return on Investment

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Measuring Return on Investment

Return on investment, ROI, is a performance metric used to evaluate the profitability of investments made to a business. To calculate this metric, simply divide the gains from your investments by the cost of your investment. The results are shown as percentages or ratios. Over time, the positive or negative numbers reveal whether a business made a smart investment or if changes need to be implemented and where.

Regardless of size or industry, calculating ROI allows investors to know whether they’re making good investments. Using ROI correctly can strengthen a business’s financial future. For instance, before purchasing new equipment, calculating ROI can help determine the value this purchase might add. Could it produce a product faster than the equipment being used now? Will it be easier for employees to manage, allowing them to work in a more streamlined fashion? You may also use your ROI calculation to measure the financial success of employees or whether to create a new department. What about measuring your marketing efforts?

Determining the ROI in digital marketing can be more difficult which is why many companies utilize a marketing ROI calculator. Here are some methods that might help you measure the effectiveness of your marketing campaigns.

Before completing adding any numbers to your marketing ROI calculator, it’s important to know what tools are available to help gather information.

  • Google Analytics/Ads: Measure organic online traffic

  • CRM software: HubSpot and Salesforce are two platforms that allow businesses to streamline interaction and gather important data

  • Call tracking software: Software that can track both online and offline campaigns to determine which calls are leading to conversions, allowing the business to pivot accordingly

 

Now to the program methods:

 

  • Single attribution, (First-touch/Last-touch): This is the most common of methodologies. This method emphasizes assigning all of the value of a program to the first, or last program that touched the deal.

  • Single attribution with revenue cycle projections: Add these projections to a first-touch single attribution to allow your business to gain insight into the long-term impacts of your programs.

  • Attribute across multiple groups and people, (Multiple-Touch Attribution): This method attempts to measure the contribution of each touch from every participant who works to close a deal.

  • Test and control groups: This method is rather straightforward. The program or treatment is applied only to one component of your target buyer and not to the other. The first is measured against the second.

  • Full market mix modeling (MMM): This method is only used by three percent of B2B marketers. Statistical techniques such as regression are used to measure sales volume outcomes, independent marketing touches and non-marketing factors.

If you’re among the 20 percent of B2B marketers who don’t measure ROI in digital marketing, all is not lost. It can be daunting to learn these methodologies and program measurement models. Remember, this is a learning curve. Quality always trumps quantity.

If you’d rather take a simpler approach to measuring ROI in digital marketing, here are some techniques offered by the Forbes Agency council.

  • Launch a Content Marketing Campaign.

  • Understand your “whys”: Know the reasoning behind each decision. Your “whys” must align with your measurable goals.

  • Segment marketing activities: Segment things like branded searches, traffic, sales and leads for every marketing activity.

  • Check website traffic sources for all campaigns.

  • Establish the right qualitative and quantitative key performance indicators (KPIs).

  • Measure consistently

  • Conduct customer research

  • Automate and integrate: Platforms such as HubSpot, when integrated with your Customer Relationship Management (CRM) tools can link marketing efforts to sales leads and ultimately close business.

  • Know where your leads originate

  • Revisit your goals often.

  • Ask your clients


If measuring your business’s marketing ROI is beyond your company’s scope or time constraints, Outlook Business Solutions can help. We serve as a marketing agency and as a business consultant. We will work with you to help determine which analytics are important to accurately fill in your custom marketing ROI calculator. Contact us today to get started.