ROI Measurement: discover what ROI is and how it can help improve your company’s performance ✅, achieve the established objectives ✌ and recover the investment made after executing the marketing action 🚀. We tell you everything below!
One of the things that companies are most concerned about is the ROI result after running a campaign, as everyone wants to receive a positive return by measuring the ROI.
Nowadays, there are many companies, both small and medium-sized, that carry out marketing actions to attract customers, increase sales, … A clear example of marketing actions are digital marketing campaigns on social networks.
But only a small percentage, allocate part of your budget to measure the return on investment generated by this marketing action, or even to establish the most appropriate action to achieve the objectives set. In both cases, the objective is to obtain benefits with the investment made.
To achieve an efficient measurement, we have metrics that will help us to quantify the performance obtained in the company thanks to the implementation of marketing actions.
In addition, if we have the right metrics, we can anticipate the impact of ROI before making the investment through tools or systems that the company has implemented.
To perform a good analysis of the action we want to carry out will give us information on which has been the most effective and which has not worked, assessing all the channels used to make the necessary improvements.
Analysis of the action we want to carry out will give us information on which has been the most effective and which has not worked, evaluating all the channels used to make the necessary improvements.
If you have already carried out some online marketing action/s and you have the statistical process control tool and you would like to know how to use it, Gesditel has a manual in which we explain how to manage and control all the processes, the control tools that exist and the advantages it provides.
What does ROI measure?
Once the ROI result is obtained, we can measure a large amount of data that will provide us with information about the profitability obtained by the company after implementing the selected marketing strategy. The most important data are:
- Impressions: quantifies the number of people who receive the publications.
- Reach: provides the number of people who have seen the publication via any device.
- Interactions: is measured through comments and Likes on Facebook; number of mentions and retweets on Twitter; number of repins on Pinterest; Instagram Likes, …
- Increase in community and active user interaction: the number of fans that grow with the campaigns and how many of these are active users who interact.
- Landing page traffic: it is the traffic generated from our PR to our website or landing page.
- Brand mentions: measures and monitors the number of both positive and negative mentions and how many are about our brand.
- Bounce rate: is the percentage of visits that abandon the website.
- Virality: is the way in which users share our publications through social media. It provides us with useful users for future campaigns.
What are the advantages of calculating the return on my investment?
When we carry out one or more digital marketing strategies, we do so with the objective of making a profit and recovering the investment made.
Once we have calculated the ROI, we can obtain advantages that are going to allow us to:
- Improve decision-making. It allows us to optimize the actions to be carried out in the campaign, improving and / or modifying them completely.
- Analyze results and make projections about future actions. It informs us about the channel with which we have obtained the highest profitability with the campaign. This will help us in future investments and reduce our risk in future campaigns.
- Budget optimization. With the information obtained, we will be able to optimize our budget by investing it in the most appropriate channels for our campaign.
- Measure the investment received from all digital marketing platforms: web, blogs, social networks, …
If you want to know more about digital marketing strategies, which is the most appropriate to achieve the objectives set out in the company, … we have it at your disposal.
What metrics allow to measure ROI?
To correctly measure this KPI (Key Performance Indicator) we have a series of metrics that will provide us with the necessary data to optimize campaigns.
The metrics that will provide us with information regarding the results obtained with the marketing strategy after making the investment, such as: salaries, cost of the campaigns, benefits and customer acquisition. They will tell us if the campaigns have been effective or not.
The most common ones to use in marketing are:
- General or area: They focus on the relationship between investment and the company’s effort to acquire new customers.
- Campaign: They study the behavior of the target audience with respect to the acquisition of leads and the sales made with the campaign.
- They study the behavior of the target audience with respect to the acquisition of leads and the sales made with the campaign.
- Product: They indicate the level of popularity of a service and its features compared to the competition.
- Digital: they measure the acquisition of followers, how many times they search for the company and the level of interactions and conversion.
What ratios help me calculate the company’s performance?
In addition to these metrics, we have ratios that will help us verify the ROI obtained and they are:
- Customer Acquisition Cost (CAC): indicates the average cost of the investment made by the company to convert potential customers into new customers for our services. The ideal is to have a low CAC.
- Marketing cost percentage acquiring a customer (M%-CAC): indicates the impact that the investment made in marketing has had on customer acquisition.
- Customer life cycle ratio (LTV Life Time Value) between CAC: allows you to estimate the value that each new customer brings to the company compared to the amount invested to acquire it. The higher it is, the higher the company’s ROI.
- CAC payback time: this is the time it has taken the company to recover the investment made to acquire new customers. The shorter the payback time, the sooner profits will be made with new customers.
- Percentage of customers originated from marketing: indicates the contribution rate of the marketing area in generating leads and new customers.
- Percentage of customers influenced by marketing: takes into account the total number of new customers with whom marketing interacted during the sales cycle.
If you are interested in improving your ROI to achieve the objectives established in the company and recover the investment made after executing the marketing action that best suits your needs, we have what you need.
Or, on the contrary, if you already have the necessary tools to measure ROI, but you do not know how to get the most out of it, do not hesitate to contact us, we will assist you without obligation.
We hope this article has helped you understand how important it is to measure the return on investment in digital marketing that are made in the company and how you can get the result.