Like everything else in your business, marketing is an investment. You put a specific budget toward it, and you need it to bring in at least as much as you spent. You’d prefer, of course, that it bring in more!
Getting a positive return on investment (ROI) in digital marketing can be a challenge since so much about it is long-term. However, you can measure your marketing results and make sure you’re on track.
Here’s what you need to know about how to measure your ROI in digital marketing.
What is ROI in Marketing?
In general, if you look at a positive ROI you count dollars. How much did you spend, and how much money came back?
However, with digital marketing, it isn’t quite as simple. That’s because a lot of your success is measured in less tangible ways, such as engagement, website visits, and general brand reputation.
When you look at how to measure marketing ROI, you need to take these elements into account along with the direct increase in sales.
Set Your Marketing Objectives
Obviously, you want your digital marketing to increase sales and bring in actual cash. However, there are many steps between your marketing tactics and the sale itself. By measuring how well you’re doing on these in-between metrics, you can see how close you’re getting to additional sales.
That means your marketing objectives should include more than just sales. It may also include growth in your email list, which leads to sales. Or an increase in social media engagement, which builds your brand and leads to sales.
Be sure you don’t just measure vanity metrics, like followers. Instead, focus on key performance indicators (KPIs) that actually lead to increases in the bottom line.
Pay Attention to Your Costs
Your costs should be expressed as a cost per lead and cost per acquisition. This will help you understand how much you’re spending to get another customer. Simply divide your marketing spend over a period, such as a month, by the number of customers you gained that month.
A critical aspect of this when it comes to marketing ROI analysis is that you want to track the impact of specific outreach efforts. Make sure you use a code on your social media ads, for example, so you know exactly how many customers you gained from that initiative.
This will help you break your costs down in more detail so you can see what parts of your digital marketing are making the biggest impact.
Measure the Full Lifetime Value of a New Customer
The final step to measuring ROI in a marketing plan is understanding a new customer’s full value. Hopefully, you have your sales funnel built to encourage repeat business and referrals. That means the real value of a customer is much more than their initial buy.
Make sure you’re comparing your cost per acquisition to the full value of a buyer, not just one purchase.
If you need help setting goals or measuring costs, a marketing firm can help. Consider a high-quality company like https://www.bearfoxmarketing.com/.
Measuring ROI in Digital Marketing Isn’t Easy
Because digital marketing can be a long-term process, it can be difficult to understand the return on investment clearly. When you take the steps listed above, you’ll better understand your goals, costs, and returns.
With these numbers, you can move toward understanding ROI in digital marketing for your business.
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