Breaking it down for us, typically in marketing ROI is a success in 5:1 ratio. An outstanding ROI stands at around 10:1 ratio. Anything below a 2:1 ratio is not profitable since the costs incurred may not break even with the profits. This, however, varies from industry to industry, different sectors, the overhead costs etc. As a marketeer, the goal is to procure a great business at a lower investment. This is marketing effectiveness, company’s performance against its investments.
What are the measures of marketing effectiveness?
Traffic? Sales numbers? Of course, but the KPIs differ from companies to strategies etc. Some initial considerations:
Determine the direct results between revenues from marketing efforts. This just highlights if the marketing efforts are in the right direction
A rich pipeline ROI is the key to determining if the efforts are a success. No new lead generation, time to jump in that team huddle
Conversion rates > Impressions
As is the mantra for any other business, customer loyalty is paramount. Retention rates have to be at the core of the marketing efforts
Thank God for the Digital World
Long gone are the days where companies would just hope that one of their outbound strategies would fly. Bombarding TV, print, radio and all the available mediums to gather eyeballs when knowing the impact of marketing strategies on revenue and the costs was just difficult & cumbersome. Inbound marketing has resolved all the inaccuracies in the marketing efforts with a huge access to database, marketing’s reach, the repeat customers, and a feedback mechanism etc.
The digital world has enabled what’s termed as ‘closed-loop’ marketing meaning that the companies can gauge the reach of their marketing efforts after the lead-generation or basically, push the envelope into driving a prospect to purchase. But, it’s profitable only when the data is up to date.
Another very important aspect is defining your marketing channels. Here are top 3 marketing segments:
Content marketing: As a media professional, I can confirm that content is KING. Good research, good intel into market practices & insights, being quick and basically storytelling must be at the core of putting out good content. ‘Hey, buy my product!’ is never going to work, the content must have an impact on the potential consumer urging them to buy your CALL-TO-ACTION
Email marketing: Again, conversion rate is paramount here. Open-rates may not determine success in email-marketing. Yes, click-through-rates are important but we have to make sure the potential customer is not deleting the mail after opening it, they have to buy into the crisp email-content and land on the desired page.
Social media: As discussed above, digital world has arrived on scene like a saviour. All the social media platforms offer ‘Analytics’ to gauge the level of engagement on the Ads, boost posts etc. The number of likes, views, shares are important, the key here is to determine the number of converts from these.
Bonus point here is an investment in ‘paid searches’ i.e. how much did the company spend in digital advertising, the number of conversions and basically, the cost of earning a customer.
My 2-cents on improving the marketing ROI.
As a part of the creative industry, I will have you know that all the metrics above are not the end-all, be-all. It’s not just limited to marketing-return-on-investment (ROMI) but Return-On-Marketing-Objective as defined by Rex Briggs. The change in how the customer perceives your band, the powerful brand recall, trust and recognition are important, now more than ever.
Some metrics to measure these would be brand awareness surveys, customer feedback, interactive Q&As online etc. The point is, it’s imperative to know and define clear goals & targets so as to know if the vision-board for the company is being followed.
It’s important to have clarity on the marketing costs; against digital spends, the team, resources, etc. Not having a plan is the first step to a disaster!
As defined above, for digital/social media strategies to come through, there has to be a robust database that’s being replenished & maintained. It’s important to have the figures clear, to know your audience & their needs, if the demographic is reached correctly. Learn the geographic-response to the efforts, to knowing if there’s scope to improvement, course-correct and expand. All of this is possible if we use the tools at hand: Date & Analytics.
Last but not the least
The pandemic has toppled and questioned everything in the marketplace. What is the objective of the company? Is it essential? How does it help the consumers? Fail to answer these and we are in a soup situation. The decade has paved the way for the rise of ‘purpose-driven’ marketing, basically, finding an identity or the purpose of the brand so strong that it becomes important for the customer. That it forms a relationship with the customer. The mission and the vision of the brand & business needs to be clear, targeted and constantly nimble with the dynamic evolution in the marketplace. Invariably, the marketing efforts need to be just as relevant. They need to strike a chord with the consumer for them to spend that hard-earned buck. The marketing needs to be more human as is the brand to find a retaliation from the consumer. So, what should be a good measure of marketing effectiveness? At the core of it all, it is stemmed in the conversion rates and the expanse of industries is tough to comment on but what I’ve learned from my experience across the sectors is what Simon Sinek also preaches strongly. People don’t care about the how, but the why. Establish that in the vision for your brand and the ripple effect in conversion rates would be rewarding.
Disclaimer Views expressed above are the author’s own.
END OF ARTICLE