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Calculating marketing ROI: Get the most bang for your buck
Use this three-step process to determine — and maximize — your marketing ROI.
There's no doubt that money and time are valuable resources for your business. Neither should be wasted when it comes to marketing your business. Put both to good use by investing them in efforts that will drive new sales and brand awareness.
Follow these three steps to minimize your risk and maximize your marketing return on investment (ROI).
1. Test the Marketing Concept
In the world of multimedia, it's easy for a business owner to get overwhelmed with marketing choices. That's why it's important to:
Second, determine what results you’re seeking. For example, you may want to drive customer awareness or a certain increase in the sales or both.
Finally, test your promotional concept on a small scale before rolling out on a large scale.
Take email marketing, for example. While it's not as expensive as sending physical mail, it can still be costly if you don't test the message first. "If you send out an offer to your email list and the offer doesn't have value, you run the risk of people unsubscribing," says Dan Kraus, president of Leading Results, a marketing firm that works with small businesses.
Kraus suggests testing your message on 10% to 15% of your email list, or at least 50 to 100 people.
2. Measure the results of your marketing
Whether it's analyzing how many new visitors your campaign brought to your business's website or counting new customers coming to your store, measure your promotion's success so you know if it's meeting your goals.
Make sure your promotion has trackable results, such as unique promotional codes, a designated URL used specifically for the promotion, or tools to track visits to your landing page from various social media sites. With an email blast, you can count how many people not only open the email but how many also click through to your website.
"In general, if you are getting 1.5% click-through or more, it's working," says Kraus, referring to the number of times people click a link in an email or an ad divided by the number of times the email or ad is shown. "If you're getting less than that, you probably need to tweak it. You should also use the results of your previous marketing campaigns as a benchmark to measure the success of the current one."
3. Refine your marketing concept
Now that you have conducted a test and measured the results, refine the concept so you can dedicate your resources to the most successful elements of your campaign. Each time you make a change, re-test the concept to better understand what's working and what's not.
"It's an iterative process," says Cary Hatch, CEO of MDB Communications Inc., a full-service media agency in Washington, D.C. "You want to be able to reallocate dollars that aren't working as well toward strategies that are working well."
By following these three steps when rolling out a new promotional concept, you can save time and money, as well as increase the chances of your message generating a greater return on your marketing investment.
Learn more about developing a long-term marketing strategy.