As a business owner, you need to make smart decisions about what you spend money on, so before you make an investment in something, you’re likely to first consider if the purchase will give you a good return on your investment.
Yet, a big mistake that many business owners make is applying this type of thinking to their marketing campaigns.
In a recent article by Digital Doughnut, called Is ROI A Good Way To Measure Campaign Effectiveness, they give 4 reasons why this faulty thinking can be detrimental to the true value marketing plays in your business.
4 Reasons Why Using ROI Isn’t A Good Way To Measure The Effectiveness Of Your Marketing Campaigns:
- Using ROI to gauge effectiveness distorts the true value that marketing campaigns are delivering to your business. Return on investment can’t measure marketing effectiveness because marketing is inherently a complex web of interactions.
- Marketing expenditures are just that: expenses as opposed to an investment. If we look at it in terms of finances, marketing costs are a profit and loss item, not a balance sheet item.
- ROI metrics don’t help us to understand marketing’s contribution to the business goals or how those contributions can be improved. In this sense, ROI is too limited and doesn’t factor in strategic intent.
- You can’t put a dollar value on someone reading your content and then remembering you when they need your services, or when someone returns to your blog posts time and time again because you’ve established authority.
How To Measure Marketing (the right way…)
So you’re probably asking yourself, “Then how do I measure the effectiveness of my marketing?”
Before we answer that question, you need to understand that the purpose of marketing is to establish and build relationships with your prospects and customers via engaging content throughout the buyers journey.
In other words, certain content is strategically created to build awareness of you and/or your brand, while other content is created to help your prospects evaluate whether or not you’re ‘the one’ for them and finally you will need to have content that’s created to convert your prospects into buyers.
All of your marketing content should be focused on building relationships through engaging content and conversations.
So how do you measure the effectiveness of your marketing?
By looking at metrics in each stage of the buyer’s journey (awareness, evaluation and conversion).
At the AWARENESS stage of the buyers journey you need to be measuring:
- Site engagement rates
- Number of inbound links
- Traffic to website by channel
Google analytics is one of the best tools you can use to keep an eye on these metrics.
Next you need to take note of the following metrics for the EVALUATION stage of the buyers journey:
- Number of leads/ email list growth
- Offer conversion rate
- Email open and click through rates
All of these metrics can be measured by your CRM, or email service provider. Infusionsoft, Ontraport, Aweber, MailChimp, Active Campaign and other CRMs have the capability of creating reports for all of these metrics.
Finally, you’ll want to measure your metrics for the CONVERSION stage of the buyers journey including:
- Retention rate
- Average customer value
- Promo email open and click through rates
- Offer conversion rate
Below is an infographic of the buyer’s journey, the metrics you should be measuring and the type of content you should be creating for each stage of the journey that you might find helpful to refer to.