How to Measure and Improve Your digital marketing ROI
ROI, or return on investment, is an important yardstick for any business to measure the success of their advertising and campaigns. Businesses that have online reach and use digital marketing always keep an eye on their ROI. It helps them determine which campaigns are being successful and which are not bringing enough customers.
With tons of ROI measuring tools available on the Internet nowadays, it can get confusing. Analysts may get confused regarding which tools and variables to take into account for an accurate picture of how the business is doing. A business needs to have a clear idea of its goals. That way, it becomes easier to determine which metrics are the right ones to reflect the success or failure of its digital campaigns.
Metrics to Measure ROI
There are tens of ROI metrics that are in use currently. Some are basic and universally used, while others have a very specific application. Some of these are:
This can be considered the most important metric when it comes to digital marketing. It indicates the number of leads or prospects that were successfully converted to the business. A crude way to measure it is to divide the number of leads pursued or engaged by the number of leads converted.
Conversion rate by itself is not a clear enough indicator of the success of a campaign. One must be more specific by acquiring the conversion rate by channel and conversion rate by device. That way, one can mobilize more funds in the method of marketing that brings more ROI and work to improve those that do not. Conversion rate ties in with both lead close rate and acquisition rate. The difference lies in subscription, sale and repeated sales respectively.
The next step after knowing your conversion rate is deciding how much funds must be allocated for a successful campaign.
A digital marketing method is considered a financial success when the total amount spent per lead, conversion or acquisition becomes lower with time. You can calculate the value of these three variables by dividing the total amount spent of the campaign by the number of attributed leads, conversions or acquisitions.
This digital marketing metric gives a very real impression of the success of a campaign for the products of the company. AOV is the average amount of money spent when a customer makes an order. If the AOV is low, it will mean that the products with lower price are more popular with customers.
A higher AOV indicates that the pricier products are doing better. This is what differentiates a high-end business from a budget business. A medium AOV value means the company is getting good ROI in every stratum of the target population.
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A customer that makes a single purchase may have been a successful conversion, but it was not an acquisition. The value of a customer lifetime value tells if the company or product is going to be viable. A business can only retain leads and have profitable customers if they keep evolving with the changing market.
The best way to deduce how much ROI your digital marketing campaigns bring in is by doing year-over-year comparisons. Market trends, seasonal trends and their effect on your digital marketing is better understood this way.
There are a large number of sub-categories of metrics to determine landing page performance. Traffic is the easiest but also the vaguest digital marketing indicator for landing page ROI.
Traffic by source is a more specific graph. Page views, visits and sessions indicate how engaging your digital marketing content is. A longer session duration ensures more conversions. Exit and bounce rates for the page tell you if and where the lead is losing interest. The number of unique and returning visitors show how good the first impression and holding power of the page is.
The best way to assess the success of your email marketing campaigns is to look at the open rate and click-through rate.
When these go below the bounce rate and unsubscribe rate, it means that subscribers are feeling disturbed by your emails. ROI decreases as a result.
Digital marketing metrics to determine social media performance are view, reach and engagement. They tell you which social media campaign is successful and relevant to people’s needs.
How to Improve Your ROI
Knowing the market and creating your digital marketing campaigns accordingly is the best way to increase your ROI. You can improve your ROI in the same way as you would achieve success in the other domains of your business.
The cardinal rules for that are:
You need to have a clear plan for how you wish to approach the digital marketing of your company. A disorganized plan can bring your business down. Examine the aim of your company and set goals to match.
In the digital marketing world, people swear by the SMART goals. This means specific, measurable, achievable, relevant, and time-bound goals. Using the framework of such goals clarifies which steps must be taken to increase ROI.
Use KPIs or key performance indicators to measure your success. They help you know how close you are getting to your goals and how fast. Good values provide motivation and bad ones tell you it is time to reassess your stance.
Blindly implementing steps will not give consistently increasing ROI. You need to test different digital marketing techniques to know which work for you. Keep testing to keep up with the tide of the market.
Once you know which method is working, it is time to put it to work. None of the snazzy presentations will have any meaning if they are not used to bring about higher ROI values.
It is not always possible for a businessman to handle the business and marketing simultaneously. It makes more sense to hire professionals for that. One should hire a good digital marketing agency to look after that field.
Bangalore is the IT and business hub of India. Naturally, there are many a digital marketing agency in Bangalore that are more than capable of doing their job. If you have a business based in Bangalore, make sure you hire a digital marketing agency in Bangalore to take your venture to new heights.