How to measure ROI is a common question we get from our clients. The answer to this question can differ for each client based on their priority key performance indicators (KPIs), but a similar process can be followed to illustrate the value regardless of the industry you are in (lead generation, e-commerce, etc.).
5 STEPS TO FINDING THE ROI OF YOUR DIGITAL MARKETING INVESTMENT
1. Determine Your Priority KPIs & Map to the Buyer’s Journey
Your digital marketing agency will provide a report that shows high-level metrics they use to optimize campaigns, such as clicks, impressions, traffic, rankings, etc. This is a fantastic start, but the key to communicating ROI is to map your priority KPIs for each step in the buyer’s journey.
- Top-of-the-funnel examples: spend, clicks, impressions, cost per click (CPC), traffic by channel, rankings
- Middle-of-the-funnel: form fill, newsletter sign-up, chat engagements, phone calls, shopping cart abandonment
- Bottom-of-the-funnel: new customers generated, revenue driven
2. Ensure Tracking is in Place & Accurately Measuring
While this seems like a basic step, it is vital in measuring the true impact of any digital marketing effort. Tools like Google Analytics are free, and by adding elements like Google Tag Manager (GTM) to your site, it can become increasingly easy to ensure your tracking remains accurate as you add new channels to your digital marketing efforts.
Test, test and test again! The only way to ensure everything is tracking properly is to do some test conversions and make sure everything looks as it should.
These same checks and balances should be in place for other tools you’re utilizing such as HubSpot, Pardot or SalesForce.
3. Ask Your Agency Partner or In-House Digital Team to Provide Top Line Performance Metrics
When you get to a point where you’re ready to build your report, it’s time to leverage your agency partner or in-house digital team. Sometimes, agencies use a few different tools to pull together reports, such as Google AdWords, Google Analytics, Marin or Acquisio, etc. Let the professionals who are running your campaigns create this report to ensure you’re getting the full and accurate picture.
4. Tie these Metrics to Your Inbound Platform & CRM
Once you have this initial report, it’s time to roll in your other key metrics. Tools like Google Analytics and Google AdWords focus on the interactions with your users before they convert, whereas tools like HubSpot or Pardot track the efforts that take place after a user converts. This gives you visibility into the assets a user engages with and where they are in the conversion funnel (Lead, MQL, SQL).
TIP: Setting up lead scoring that automatically labels users as they move through the conversion funnel can save you time and ensure leads are warm before reaching your sales team.
Once a lead passes to the sales team, it is typically tracked in a CRM like Salesforce. Here you’ll be able to see when a lead turns into a customer.
[bctt tweet=”TIP: Setting up lead scoring that automatically labels users as they move through the conversion funnel can save you time and ensure leads are warm before reaching your sales team.” username=”befoundonline”]
5. Generate your ROI
Marrying these systems together in one report will paint a visual of the true impact of a digital marketing investment. Once you have this, you should be able to map:
Cost > # of Leads Generated > # of Customers Generated
Assuming you have a value associated with your new customer, the ROI can be generated using the formula:
ROI = Total Revenue – Total Cost / Total Cost x 100
USE THE RESULTS TO ALLOCATE FUTURE DIGITAL MARKETING BUDGETS
Communicating the ROI of your digital marketing efforts is a great accomplishment, and now you should use this information to your advantage to determine what channels are impacting your bottom line the most. Just go through the same exercise as above for each digital channel and use this information to inform future budget allocation. This ROI can also serve as a benchmark that you use as a measure to test new digital channels (social, organic search, display advertising, paid search, etc.). Want to know more? Start a conversation with the expert.