Never underestimate the importance of measuring your return on investment (ROI).
The old cliche is, “the definition of insanity is doing the same thing over and over again and expecting a different result.”
While yes, this phrase is overused, there is truth to it. It’s unrealistic to continue with the same process and think that eventually something different will happen.
If you create simple weekly goals for yourself but don’t make room in your schedule to complete them, you won’t accomplish even those simple goals.
Sometimes, you have to try new ways of doing things to find success.
When it comes to your marketing campaigns, you need to have parameters in place to measure the success of the campaigns and identify how they are impacting your business.
If sales are stagnant, you can’t keep rolling out the same campaign again and again and expect things to get better. You have to analyze the data to determine the ROI and identify opportunities for improvement..
Tracking ROI is important for multiple reasons.
Imagine you are rolling out a totally new campaign. It’s an expensive one. Do you think the best strategy is to just go through the campaign, hope and assume it worked, and then continue the campaign indefinitely?
Well, if the campaign isn’t producing the desired results but you never check the numbers, then you could end up spending a lot of money for nothing.
Assessing your ROI allows you to optimize your campaigns. You can find out which of your marketing strategies is most successful and allocate more resources to high-performing campaigns that help increase your marketing impact.
On the flip side, when you find a strategy that has been slacking in terms of ROI, then you can either ax it completely, or find a way to make it better.
This is an extremely basic way of looking at your ROI and includes some assumptions when it comes to the final tally on your ROI. This formula is a good starting point but you should also consider organic sales growth during the time of the marketing campaign and carefully analyze any other factors that could convey success within the campaign.
For example: let’s say you ran a television ad for 2 weeks. During that time, your sales grew by $1,000. The initial cost of the ad was $750. Let’s plug that into the formula:
(1,000 - 750) / 750 = 33% ROI
Not bad! But now let's say that historically speaking, during this time, sales always grow due to the seasonality of your product offering. Luckily, there is another formula that takes factors like this into consideration.
This formula is very similar to the basic one and just as simple to calculate. However, the addition of the average organic sales growth is instrumental in finding a more accurate measure of ROI.
Your average organic sales gross should factor in the past 12 months of growth. Take the growth of each month and average them out. To continue with the previous example, let’s say that the average growth percentage comes out to 7%. So, you’ll take the sales growth during that time ($1,000) and multiply it by 7% to get $70.
Now, we can calculate a new equation:
(1,000 - 70 - 750) / 750 = 24% ROI
Still good and better yet, more accurate.
You can even get detailed with your ROI — and current technology can help with that. You can set up social campaigns, emails, banner ads, and more so that they can actually track the conversions from people who were exposed to these campaigns.
For example, if someone received a newsletter from you and from that email they entered your site, placed an item in the online shopping cart and then purchased it a few days later, you’d be able to properly attribute that sale to the newsletter campaign.
One of the top technologies that brands are turning to for help in their marketing success is DAM solutions.
Digital asset management (DAM) is a single digital source for marketing assets like images, banner ads, social media creative, and more. When you have all your assets in a single, searchable space, you can improve the ROI of your campaigns by reducing the costs of production since you can re-purpose materials from previous marketing initiatives.
When digital assets have metadata and other descriptive information attached to them, they are easily accessible for the next big marketing campaign or sales pitch. Because the assets can be repurposed for ROI-driving campaigns, the value of the assets increase.