I’m sure you’ve noticed how much money companies spend on their marketing.  What you see does not always mean it’s productive spend or that it’s even working. Have you sat down and figured out how much you are spending? And are you getting your money’s worth from your efforts? That’s why ROI (return on investment) measuring is so important. It will answer your questions about whether your marketing is actually working and bringing in the results you expect.


What exactly is Marketing ROI?

By definition, marketing ROI is the return on the investment a company receives from its marketing efforts. It includes email marketing, social media, digital and every other type of outreach marketing, including snail mail. ROI measuring should be a top priority for all companies.  At Red Palm, we won’t run a campaign unless it can be benchmarked and measured for success.

Using ROI measuring can offer several important benefits, including:

  • Money spent. Was it justified?
  • You can compare your marketing performance against your competitors. Is their marketing more or less successful than yours?
  • Makes you and your team accountable. Is the money you’re spending worth it?
  • How is it tracking over time?  Month-Over-Month; Year-Over-Year?
  • Helps you make important decisions on what and where to spend your marketing dollars. By tracking your ROI you’ll know what efforts are working and which ones aren’t

What are the components that factor into the measuring of ROI? Setting clear goals and knowing how to identify the costs involved is a great start. You will want to enlist a marketing professional to set you on the right track right out of the gates.  In Digital Marketing, that will include connecting systems that track your campaigns activity and progress through the sales funnels.  Offline, that may mean incorporating POS systems with digital marketing platforms so you can get a full 360 picture of the customer journey.


How do you calculate ROI?

Put very simply, the ROI is the sum of the marketing campaign’s financial gain minus the cost of the campaign, divided by the campaign cost. You always want the sum to be a positive figure. If it’s not, then your ROI measurement is telling you that that particular marketing effort may have been a bust. Simplified, the basic formula is ROI = (Value – Cost) / Cost.

Beware, it’s easy to make some mistakes when analyzing the sum. Often a downside of taking an ROI measurement literally is that it is only showing the profits in the short term. It can underestimate some long-term benefits such as brand value. This is where your marketing professional can “cut through the noise” and advise you as to whether a marketing effort is worth the expense. They can look at the long-term picture and understand that yes, marketing should bring in profits, but it can also do more for a company by building lasting value and customer retention, thus generating more profits in the future.

Remember, ROI doesn’t always have to be related to financial profit/loss, but you do have to be wise about what you track.  Be careful of the pitfalls of tracking “feel good” metrics like social media likes and followers. Instead, focus on the impact your campaigns have on top of the funnel sales campaigns.  Most of our client attribute leads or cart checkouts to their campaigns.

Bottom line is that you want to determine the best way to engage your customers and maintain long-term relationships. And, as you can see, ROI measuring can be a bit daunting. We deal with it every day and know the ins and outs and what works and what doesn’t work. Don’t hesitate to ask us!


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