If there’s one area that many businesses struggle in it’s measuring marketing ROI. Tying results to a specific marketing effort or campaign is often challenging, and failure to set up the right goals and metrics can lead to sunk marketing costs.
But is there a solution? In fact, there are specific metrics for tracking marketing ROI that are easy to implement and that will give you the insight you need into where your marketing dollars are going. If you’re just starting out in terms of learning how to track marketing ROI, you’re probably best served to taking a “KISS” approach to metrics. In other words, “Keep it simple, stupid.”
Read on, and you’ll find some of the basic strategies and metrics that you’ll need to understand how to track marketing ROI. Eventually it will become very important for you to take a deep dive into ROI tracking metrics, but first you need to make sure you take the following foundational steps.
1. Start by Setting Up Goals
When setting up marketing goals, you should consider each media specifically and set up goals tailored to each one before undertaking any marketing campaign. Your goals are bound to differ from medium to medium, but consider the overall objectives of your marketing and tie in metrics unique to each one that contribute to overall marketing success. For example, a radio ad designed to drive social media traffic might have a goal such as “Increase Facebook follows by 23% in the next quarter.” The key is for your metrics to be tied to SMART goals (Specific, Measurable, Achievable, Realistic and Time-Bound). Being specific allows your efforts to be laser focused, and measurability gives you quantitative feedback so you know what’s working and what’s not. They should be achievable and realistic, otherwise you’re simply setting yourself up for failure. Finally, if you don’t have time-bound goals, there will be no sense of urgency to meeting them.
2. Use Your Goals for Determining What to Track
For the next step, make sure that any metrics you’re tracking are tied to one of your SMART goals. Say you have an automotive dealership, and the goal is to generate a certain amount of maintenance service revenue over the next quarter, specifically with the use of digital coupons. The metrics you might then set up for the coupon marketing campaign could be clicks to the coupon link, redemption rate, or number of unique visitors to the coupon webpage. Similar to the goals you’ve set up, the metrics you track will vary based upon what you’re seeking to achieve with each medium.
3. Create Measurement Baselines
Baselines are crucial because they provide a starting point with which to measure success, as well as potential shortcomings. You need to establish what “normal” looks like so you can work up from there. In most cases, your ROI baseline will come from data of any previous marketing efforts that you might have. Of course, you may not have this information readily available or simply may not have been tracking past marketing campaigns. If that’s the case, you want to start capturing data immediately to establish some sort of baseline. But if you’ve been marketing on Facebook, for instance, you’ll already have historical stats available as to the number of likes, follows, and shares you could typically expect. If your goal is to increase Facebook engagement by a certain percentage over the next ninety days, reference the engagement stats that Facebook analytics provides you as far back as possible.
4. Determine How You’re Going to Track Marketing Efforts
This might seem simple and obvious, and often times it is. But this step all comes with following a process and being prepared. Tracking can be in the form of Google or Twitter Analytics, Facebook Insights, Klout, or a variety of other online tools at your disposal. Or it could be as simple as implementing a spreadsheet to track key metrics. The important thing is that you have a system in place that is going to work for your business moving forward, and that you can reference in the future. It’s also important to note that if you’re using multiple forms of advertising, you take a close look at your overall growth. This can be in terms of revenue, customer acquisition or other key goals you’ve initially set with your media partner. Taking a consistent, holistic view will enable you to have all your marketing efforts working in tandem for you towards the same growth targets.
5. Analyze and Optimize
Tracking the results of your marketing efforts isn’t enough to get a crystal clear picture of ROI. The final step is to analyze the results in comparison to the SMART goals you’ve set. If you’ve followed the previous steps correctly, it will be obvious whether or not you’ve met your targets. Either you increased traffic to your website by 30% from radio ad campaigns over Q2 or you haven’t, for example. Tools like Google Analytics conversion tracking are great in this respect, giving you a clear picture of where your traffic is coming from and if those visitors are converting. Once this analysis is complete, you can use this information to determine what’s working, what’s not and move towards a more optimized marketing game plan next time around.
It’s easy to get overwhelmed with the amount of tools, strategies and information out there for tracking marketing ROI. But if you’re just embarking on your journey, taking a KISS approach will help you implement a system, develop marketing goals that make the most sense for your business and help you decide where your marketing dollars are best spent.