When running a business, everything needs to be worth it. That means ensuring everything you spend has a value and brings money back into the business.
From a photo shoot to an email or social media campaign or event, everything needs to add value. However, how do you know if your activities were successful?
You can do this by measuring the Return on Investment (ROI) of your activity.
What is ROI?
A monetary focused metric, this is a staple for measuring success within the majority of businesses. If you’re looking to make your money back and more, you need to be measuring your ROI.
Calculating the monetary value of your tactics, ROI looks at the ratio of your investment against your return. Although it doesn’t tend to happen straight away, the ROI of a marketing campaign or event will be calculated in the weeks or months that follow, allowing potential sales, new and repeat business or lead conversions to move through the funnel.
Why is ROI important?
Making money is the number one objective of any business.
Therefore, getting your product or service noticed means all your efforts need to directly impact on your sales. And, when it comes to determining which campaigns, events and other investments brought the greatest returns, ROI is the best way to discover this.
However, it doesn’t come without its troubles.
If you’re putting money into something, regardless of how much it is, you’ll want to know how successful it is straight away. However, this isn’t possible.
As the most effective way to measure the financial success of a campaign, the results won’t be immediately available. This can be worrying if you’re trying something new that hasn’t been tried before.
The lack of immediacy shouldn’t be too worrying though, as the success can start to be measured in the weeks and months that follow. In some cases, such as with some social media campaigns, results may be visible within a few days if the campaign was only short. However, for SEO, content marketing and PPC, the results may take longer to show. That’s why it’s important to do monthly, quarterly and planned reports on your activities throughout the year to ensure you get to see the true success of what you’re doing.
This isn’t the only issue when it comes to ROI, and once your reports start to come in, you’ll be able to see what is and isn’t working. Some of the biggest issues that affect businesses when it comes to good ROI include:
Lack of KPIs – Key performance indicators will let you know if a campaign was successful or not. Having these outlined before an activity takes place will let you know if the activity was successful when measuring the ROI. It’ll also allow you to see how long it took to be successful and what needs to be changed in the future. If you fail to have these in place from the get-go, you won’t be able to tell if the campaign worked or not.
Miscommunication – when a campaign relies on multiple departments, it’s important to ensure the brief is tight and everyone knows what they’re doing, otherwise, this can cause delays and result in issues further down the line that won’t become visible until reviewing.
Messy Data – when it comes to collecting the data for your activity, make sure it’s done properly, on time and kept in one place, otherwise, you’ll only encounter problems and won’t have a true reflection of what was achieved.
How to improve ROI
Now that you know what ROI is, why it’s important, why you can’t measure it straight away and why companies can have issues with it, let’s talk about how you can improve your ROI.
First, if you ensure the previous points on how businesses go wrong aren’t missed, you’ll get the best idea of a campaign’s success, giving you a better insight of how to improve your ROI.
Where to spend your money: by accurately measuring the ROI, you’ll be able to see if you’re spending your money in the best places. You’ll then be able to see where to channel the money, instantly helping to make more through one channel while reducing the spend where it isn’t as successful.
How to pivot your marketing strategy: this fits in nicely with the above, but, you’ll be able to see what elements within your marketing strategy are working. You’ll then be able to speak to customers better and produce content and offers they’re responding to. And, if they’re responding better, there’s more chance of increased sales and customers.
Your tools: finally, making sure you have the right tools to improve your ROI is key, there are plenty available out there, from Google Analytics to Hootsuite, to help you measure success and ultimately increase ROI
If you’ve been trying to improve your ROI, but you still feel like you need help and would like to see what we can do for you, please get in touch today.