When measuring the performance of marketing initiatives like social media, influencer, blogging, video, and sponsorship, many marketers recommend return on investment (ROI) as the best metric for the task. ROI is very helpful, however, it’s not the definitive measure of a marketing campaign's success. Instead, the fluctuation of ROI, professionally known as return on marginal investment (ROMI), gives a clear picture of marketing performance.
Mid-West Family Springfield, IL sheds light on practical ways to measure ROI and ROMI.
How to Measure ROI
While there are several ways to measure the ROI, top marketers prefer attribution marketing models. This is because the models clearly show your content, ads, channels, and other marketing efforts on revenue generation.
What are Attribution Models?
An attribution model is a set of regulations determining how credit is issued to various marketing efforts after conversion. For example, in the first interaction attribution model, marketers give full credit to the marketing effort that initiated conversion.
On the other hand, in the last interaction attribution model, marketers give all credit to the effort that immediately led to conversion. All other efforts that played a role in the sales funnel do not get credit.
Choosing the Right Attribution Model
Each attribution model is different. Therefore, choosing a suitable model requires subjectivity from the marketing team and key decision-makers within your company.
The top models you would consider using are:
- First touch attribution: In first touch attribution, marketing teams give 100% acknowledgment of the first marketing effort that led a target customer to your product. Marketers recommend it since it is one of the easiest to implement.
- Linear attribution: The linear attribution model recognizes every marketing effort that leads to conversion as equally important. For instance, if a Facebook post directs a target customer to your blog, you give equal credit to the blog and social media post.
- Last touch attribution: In last touch attribution, marketers recognize the last marketing effort that leads to a sale as the most important. For instance, if a prospective buyer discovers your product through a blog, you give full credit to the blog. It doesn't matter if the customer located the blog through other marketing channels.
- U-shaped attribution: The U-shaped attribution considers the first and last touches the most valuable touchpoints. For that reason, marketers award each of the two touch points with equal credit— 50%.
Things to be Cautious of When Using Attribution Models
Attribution models have a couple of issues to watch out for when calculating ROI. For instance, you need special software to track a buyer's journey throughout the sales funnel. With the tools, you will know if the marketing efforts played a role in conversion.
Besides the analytic tools, you must understand how to track the buyer's journey using cookies. Note that cookies are not always appropriate due to the depreciation of third-party cookies.
Other critical issues to watch out for when calculating ROI include the following:
- All leads do not convert to a sale
- Some leads take months or years to convert
- Attribution can be hard in a cookie-less world
- It is hard to determine the period it takes customers to accumulate value
- It is hard to attribute the conversions to brand awareness
How to Determine Marketing Metrics
Apart from attribution models, you can assess marketing campaigns' performance through metrics like customer acquisition costs, click-through rates, and bounce rates. The metrics help marketers determine the value of an exact type of marketing effort — return on marketing investments (ROMI).
The top metrics that can help your business monitor its ROMI include the following:
Customer lifetime value: This metric helps companies determine the value of a client throughout their business relationship. The metric helps spot signs of attrition and take necessary precautions to retain customers.
Customer acquisition cost: The budget companies spend to convert a target to a client. It includes the cost of lead generation and creative content. This metric helps determine if your costs of acquisition are reasonable.
Email open rate: The number of target customers who view your marketing emails over the total number of emails you send. This metric helps you determine the performance of email campaigns.
Click-through rate (CTR): The number of clients who open your ad after seeing it online. A higher CTR means your ad is of high quality, while a lower one implies that your ad is not luring.
Conversion rate: The fraction of consumers that buy, call, subscribe, or take any other required action after reading your marketing message. The conversion rate can also be determined by the number of leads generated after a successful email marketing campaign.
Organic traffic: Organic traffic is the fraction of people visiting your website without paid intervention. High, free traffic indicates successful SEO and good content quality, while low traffic presumably indicates poor SEO.
Engagement rates/bounce rates: Engagement rate is the number of reactions, shares, direct messages, calls, and comments you get after posting marketing messages on social media. On the other hand, bounce rate is part of the traffic that leaves your site immediately after they check in, probably because the site does not offer what it promises.
Form fills: Form fills the number of visitors filling out an online form while interacting with your marketing campaign. A higher number shows that your content, social media, email, and other marketing efforts convert effectively.
Gated content downloads: Gated content is the total number of downloads you get after target customers fill out a form to access the free content. Several downloads offer many qualified leads, an asset for marketers.
Marketing qualified leads: An MQL is a target customer showing interest in your company's product or service. Unlike other leads, marketing-qualified leads are more likely to purchase your products.
Sales qualified leads: Gartner describes an SQL as someone ready to convert. Typically, SQLs have the budget to acquire your product and services and the independence to make buying decisions.
Cost per lead: CPL is the sum you pay a service provider for leads generated. This metric helps marketing teams to analyze if the lead gives a better value. As a result, they can choose to stop buying or negotiate for a fair price.
Measuring Success Starts with the Right Metrics
Measuring your marketing efforts is the right step toward success. The strategy helps you review your content, social media, inbound, search engine optimization, and email marketing strategies to determine the expected value. The insights generated help modify your marketing strategy for success.
Want a marketing plan with measurable results and a local focus? It all starts with a free marketing strategy consultation with Midwest Family Springfield.
