You want to invest in marketing strategies for your business, but aren't sure which ones to prioritize. Here's how to compare ROI for marketing strategies.
Around 40% of marketers claim that proving the ROI of their marketing efforts is their top marketing challenge. Learning how to calculate and compare ROI for marketing purposes will help you make better marketing decisions.
ROI stands for Return On Investment. It's the ratio between the net profit and investment cost. Having a high ROI gives you better insight into a marketing campaign's financial success.
Your small business deserves to thrive. It'll thrive more than ever once you have numbers to back up your business decisions.
Here's what you must know about comparing marketing ROI:
Know Your Strategies
Correctly interpreting ROI involves knowing each marketing strategy down to the letter. Content marketing is known for having a low cost of investment and high ROI rates.
Nonetheless, you must know exactly how to leverage your blog content to generate sales, leads, and conversions. Include direct calls to action on the bottom of your blog posts with relevant links.
Planning and Setting Goals
Social media marketing is also famous for having a good ROI. Brand-building on social media is more important than ever, so remain active on several platforms to get results. Plan on conducting a consistent campaign to generate brand awareness, leads, sales, and more.
Setting goals will give your marketing management a sense of direction. The best goals are measurable yet relative. Always research your market to determine realistic goals.
Determine the Costs
The only way to accurately calculate ROI for marketing management is to know the exact amount of money you spent on a marketing strategy. This number is crucial to the equations marketers use to calculate ROI.
Keep in mind that marketing strategies shift with the times. For example, COVID-19 marketing strategies rely more on digital marketing and a different set of consumer behaviors. These factors are important to consider while crunching numbers.
The simple equation to calculate ROI is sales growth minus marketing costs. Then divide that number by the marketing cost number to determine your ROI.
Here's another formula:
Calculating ROI for Marketing
Multiply the number of leads you generated by the lead-to-customer rate. (If you received 14 out of 100 leads, it's 14% or 0.14.) Then multiply that number by the average sales price.
Once you arrive at a new number, subtract the cost sent on ads from it. After that, divide that number by the ad costs, then multiply it by 100 and voila! You have calculated your ROI.
To give you a better idea of how it works, here's what the marketing ROI equation looks like: [((number of leads x lead-to-customer rate x average sales price) - cost or ad spend) ÷ cost or ad spend] x 100.
If you're not good at math, use a ROI calculator. There are plenty of free ones available online.
Calculating ROI for Marketing Is Easier Than You Think
Small businesses with blogs report generating 126% higher lead growth than small businesses without blogs. Having a strong content strategy will take your ROI for marketing to the next level.
Calculating the ROI for your business is important, but so are the other aspects of a marketing strategy. For example, when it comes to social media marketing, always mind metrics like engagement, likes, impressions, user actions, and more.
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