Understanding your Marketing ROI
At the most basic level, return-on-investment or ROI compares the amount of money you spend on a marketing campaign with the amount of revenue you gain from it. And this can prove to be quite tricky, so we’ve compiled a few tips on understanding your marketing ROI.
One of the first steps in tracking ROI is understanding the amount of money you are spending on marketing. This can either be totally clear if you are running ads or utilizing SEO, or it can be trickier if you are posting on social media, creating content for your webpage or printing out postcards. When creating content for marketing it is important to track the amount of time you spend creating it as well as the upfront cost. A helpful tool for tracking time is Toggl. Once you know how much time you’ve spent on a marketing campaign; you can calculate the time invested against your hourly rate to see the cost.
There are three basic areas for measuring ROI on marketing
1. Who knows about you?
2. Who is talking about you?
3. Who is buying from you?
Who Knows About You?
This category is basically how much attention are you getting on social media.
– How many Likes do you get?
– How many followers do you have?
A good way to analyze this is by using Analysis Reports. (You can find these for free on the web). Using the reports, you can then gauge increases in likes and increases in web traffic.
Who is talking about you?
Here you look at shared posts, recommendations, and comments on posts. Social analytics tools are helpful in tracking your growth.
Who is buying from you?
This one means asking the basic question of “How did you hear about us?” You can also ask, “Why did you choose our company?” You can even be more specific and ask them if they looked at your website, social media, or blog (if you have one). Once you know how they found out about you, keep track of it. Put it into a spreadsheet so that you can see what marketing strategy is giving you the most business.
All of these areas are important considerations when marketing your company, but the most useful is obviously who is booking with you. This is the best and easiest way to understand how clients are hearing about your business and why they chose you as their designer.
Now let’s get into actually calculating the ROI. The basic formula for ROI is as follows: ROI = Net Profit / Total Investment x 100
So, if you have a net loss your ROI will be negative.
Once you understand which marketing campaigns are garnering the most profit then you can focus on those, saving you time and money. With these few tips, you can get a head start on understanding your marketing ROI.
Nick May is the host of a widely acclaimed interior design podcast, The Chaise Lounge, dedicated to the business of interior design. Each week he interviews top designers from across the globe to find out how they got into interior design, why they started their firm, and what has made them so successful.
Another excellent blog article on Marketing is Creating Your Marketing Ecosystem.