How to Measure and Understand Marketing ROI

Chris Krup

Chris Krup About The Author

Dec 29, 2020 9:15:00 AM

How to Measure and Understand Marketing ROI

The return on investment, or ROI, is one of the critical indicators of a business's success. ROI is the profit that a company makes from marketing investments along with others. In turn, ROI can help determine whether something is worth the investment based on the profits it yields. In advertising, your ROI will help gauge whether your ad campaigns are helping or hindering your business.

One of the best ways to enable your business to succeed is to match your marketing efforts to your goals, which will help boost ROI. With a better understanding of your ROI along with clearly defined goals and corresponding analytics to measure, you'll get the most from your marketing campaigns. According to a study from the Content Marketing Institute, 72% of successful businesses stated that effectively measuring and monitoring ROI led to their success.

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Want to learn about how to measure ROI? Here we'll review ways you can set specific and achievable goals, identify the appropriate KPIs that match those goals, and subsequently monitor ROI to track the success of your campaigns. 

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Identify Your Key Goals

All marketing campaigns need to have specific goals that help contribute to overall success. Depending on what you want to achieve with a given campaign, there are specific goals you can set. Some of these goals may include:

  • Brand awareness — You may want to make more people aware of your brand through a brand awareness campaign. You can increase brand awareness for your business by showcasing your offerings and showing the value they bring to your audience, along with what differentiates you from competitors.
  • Lead conversion — Another potential goal may be to increase lead conversion, turning more prospects into customers. In the process, you may want to connect with people at specific points in the sales funnel when they're likely to convert, or you may want to expand your reach.
  • To get customers into the sales funnel — In some cases, you may want to focus on the beginning of the sales conduct as you work to bring more prospects into it and boost lead conversion.
  • Increase in web traffic — You may also want to bring more people to your website or a specific page. This may work to improve search engine rankings, educate new potential customers about your brand and offerings, or encourage people to share your content.
  • Increase in foot traffic — For local businesses, the main goal may be to bring people to their physical locations.
  • Increase in sales — One of the most prominent goals of a marketing campaign is to increase sales and overall revenue. 
  • Growth on social media — Social media marketing can be integral to increasing brand awareness, getting people to share your content, or standing apart from competitors.

Choose KPIs That Are Directly Related to Your Goals

The next step is to select the key performance indicators (KPIs) that correspond with those goals with specific goals identified. The KPIs will then help you with calculating and understanding ROI.

Running an Email Marketing Campaign

If you want to use an email marketing strategy, KPIs to examine could include:

  • Click-through rate — The number of readers who click on the link included in the email
  • Open rate — The number of recipients who open your emails
  • Bounce rate — The number of recipients who are quick to close the email after opening it

Ready to learn more about email marketing?

Increase in Sales

When measuring the ROI from efforts to increase sales, use this formula:

((return - investment)/investment) x 100 = Total percentage of ROI.

Social Media Campaign

Some KPIs to look at in social media campaigns may include:

  • Engagement rates — Accounts for any shares, comments, or likes on your social media posts
  • New followers/fans — The size of your audience following your profiles on Twitter, Facebook, Instagram, or other social media channels
  • Leads acquired — The number of leads received through links and CTAs on social media

Directly to a Landing Page

The following are some KPIs you might look at if you want to increase traffic to a specific landing page:

  • Traffic
  • Unique visitors
  • Time spent on the page
  • Actions taken on the page

Understanding Your ROI

To gain a better understanding of your ROI, there are some steps you can take that will enable you to better gauge the success of your efforts. These steps include:

  • Knowing the 'why' — With a better understanding of what you want to achieve with your campaigns, you can determine which metrics to look at and use them to measure ROI accurately.
  • Make sure to measure consistently — Use the same platform and method for analyzing metrics, which will give you more consistent results.
  • Use a CRM system — A good CRM like HubSpot can make it easy to consolidate data, automate many processes, and improve the overall organization of information.
  • Revisit your goals regularly — Do what you can to review your goals periodically and determine whether your efforts help your business achieve them.

With specific goals, KPIs, and a good understanding of your ROI, you can make sure you're getting the most from your marketing efforts and budget. Knowing how to measure your ROI will ultimately allow you to plan your marketing campaigns more effectively and efficiently.

Ultimate Guide to Measuring ROI