Our tip of the week: how to measure your ROI
Marketing performance measurement is a controversial subject. John Wanameker once famously said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”. It is somehow interesting, that even after 100 years, with all analytical frameworks and technology at our disposal and so much research done into the field, we as marketers still sometimes struggle when it comes to proving ROI. But we are getting better at it.
But let’s make something clear here. ROI makes perfect sense as a profitability ratio. When a person is presented with quantitative data (and monetary values) it is almost immediately clear how their money was spent and what was (or wasn’t) gained in return. On the other hand it is more challenging to explain the ROI to someone who just invested in the PR campaign with the objective to increase brand awareness, but expects to see results in monetary terms.
Measuring marketing performance is fairly easy when it comes to some campaigns. Let’s use social media as an example. One of the aspects you can measure is the size of the conversation about your brand. This is often referred to as volume. You can measure number of tweets of Facebook posts where your brand is mentioned, but also look at the number of messages about your brand and how these numbers change over time.
Reach is another useful metric. It can help you paint a picture about the size of your audience. Where it really becomes powerful is when it is compared with another metric. For example, depending on your campaign you could pick clicks or retweets and divide them by reach to calculate the engagement ratio (or percentage). The engagement can also be measured by looking at the number of retweets, replies or comments. But how do we put a value on this type of metric?
There are tools which help you tag your website visitors so you know exactly what’s going on and you can connect the social media to revenue. Let’s say that your every tweet costs £2. You post content with a link to your website. Someone clicks on the link and as soon as this person arrives at your website, a unique ID is generated and allocated to this visitor. From this point on the visitor’s behaviour is being tracked. If this person submits an enquiry through the website or purchases a product or subscribes to your newsletter, you will know about it.
But social media may not be the best promotional tactic for your business. Perhaps you are a B2B company for whom maintaining relationships is important. If that’s the case, you may want to consider a promotional gift campaign. Here are our tips how you could measure your ROI.
It is actually quite easy, as figures are readily available. Telemarketing and CRM systems are very useful when measuring campaigns like these. After sending out a promotional gift, the telemarketing team makes contact with the prospect to confirm the successful delivery and receipt. During this conversation, specific questions are asked to determine the prospect’s readiness to make purchasing decisions, and will most likely also gather additional useful information about the company (that’s how telemarketing works here at Spirus). An appointment can be made for a product demonstration or another call arranged to further discuss topics. When the purchase is made you know exactly where your money has been spent. Thanks to specific targeting, information stored in a CRM system and the relationship development trail following the campaign, performance of the campaign can be closely monitored. You know how much you have invested and how much has been generated as a result.
It is however worth pointing out here that it’s thanks to CRM and telemarketing, especially in B2B, that your tactics generate ROI. With a proper follow up strategy in place you will maximise the effectiveness of your campaign. Sending a promotional gift, a flyer or even an introductory email on its own won’t bring many results, if any. This is only another touch point and a medium for building relationship with your target audience. It is up to you to nurture that relationship but if you don’t have time, that’s what we’re especially good at.