The Role of ROI in Marketing Success
Return on Investment, or ROI, is an important part of any business model. It answers one of the most fundamental questions in business: ‘Is our product or service making a profit?’ Regardless of size or industry, there is a basic formula for determining if your investment is making money:
In terms of marketing, your investment would be a campaign or promotion that you (or a third party) execute in order to bring in revenue.
Why Track Marketing ROI?
Tracking your ROI for marketing campaigns is particularly important because the success of a campaign will affect your entire business. If you’re going to run a referral campaign 3 or 4 times a year, you’ll need to know if it is a successful endeavour. Not tracking marketing ROI means that you’re just assuming that your campaign is in the green.
Determining Cost of Investment
The cost of a marketing campaign basically stems from two major factors:
- Marketing Materials - This can include things like printing costs and postage for direct mail, branded promotional items, business cards, landing pages, and even a prebuilt, turn-key campaign.
- Time Spent Building/Running Campaign - Marketing requires man power. There’s no getting around that. It’s important to keep track of the labor put into a campaign, from setup to follow up. Determining how much an hour of time is worth is necessary to evaluate ROI.
Determining Revenue Earned from Investment
Revenue earned is the products/services that were sold as a result of your marketing efforts. As long as the pricing is correct, revenue is simple to calculate. The only real grey area comes from recurring revenue, but with a contract length, it can be estimated accurately.
Actively Tracking ROI
Here are a few things to keep in mind when you’re getting your campaign set up:
- Track Products/Service and Lead Source from the Beginning. Ideally, the sales cycle for a marketing campaign will have conversions within a few weeks of the event. In reality, that isn’t always the case. There are times when you’ll have a lead that takes several months to make their decision. By adding which products/services they’re interested in and which marketing avenue was the source of the lead, you’ll have a better idea of how effective campaigns are -- even if the sale doesn’t happen right away.
- Establish and Test Metrics. Before you do anything else, you should know what reports, statistics, and measurements you’ll need and where to find them. How are you going to know how much time your team has put into the campaign? Where are you going to find out how much money you’ve earned/lost on the event?
JoomConnect: Your Marketing Metrics Secret Weapon
JoomConnect can play a pivotal role in accurately tracking ROI by automating much of the information that you’ll need to determine the success of the campaign. With JoomConnect, It’s possible to automatically generate a sales opportunity that has client information, product information and pricing, lead source, and is all tracked to the appropriate marketing campaign in ConnectWise.
As you being to win or lose opportunities, your ‘Revenue Earned from Investment’ will automatically be calculated. Marketing campaigns also allow you to insert the total cost.
From there, your ROI will automatically be calculated.
If you don’t use ConnectWise, you should still make the effort to calculate ROI using the equation. A little math is better than losing a lot of money. If you’d like to learn more about marketing automation strategies and how JoomConnect can help you when running campaigns, sign up for a demo!