Creating a marketing strategy is not only instrumental in achieving business goals but is also a key factor in effectively measuring and demonstrating Return on Investment (ROI)!
In this article, we explore the ways in which developing a marketing strategy provides the necessary tools to evidence ROI, including how it informs tracking efforts, guides spending decisions, and establishes a measurement framework. Additionally, we will delve into example metrics that can be tracked to quantify and showcase the impact of marketing initiatives.
Informed Tracking Efforts:
Developing a marketing strategy involves setting clear objectives and identifying key performance indicators (KPIs) that align with business goals. By doing so, you establish a roadmap for tracking efforts that directly contribute to these objectives. For instance, if the goal is to increase online sales, tracking website traffic, conversion rates, and the source of leads becomes essential. Having a well-defined strategy ensures that tracking efforts are purposeful, focused, and directly tied to the desired outcomes.
Guided Spending Decisions:
A well-crafted marketing strategy serves as a compass for budget allocation and spending decisions. It helps identify the most effective channels, campaigns, and tactics that are likely to yield the highest ROI. With a strategy in place, you can allocate resources to initiatives that align with your objectives, ensuring that your marketing budget is optimised for maximum impact. This informed spending approach enhances the efficiency of your marketing efforts and contributes to a more measurable and tangible ROI.
Establishment of a Measurement Framework:
A crucial aspect of demonstrating ROI is the establishment of a robust measurement framework. Your marketing strategy should include a plan for measuring the success of campaigns, channels, and overall performance. This framework can encompass various metrics, tracking tools, and analytics platforms to systematically collect and analyse data. The measurement framework not only informs ongoing strategy adjustments but also provides concrete evidence of the value generated from marketing efforts.
Example Metrics to Track for ROI
Measure the percentage of visitors who take a desired action, such as making a purchase or filling out a form. High conversion rates indicate the effectiveness of your marketing strategies in driving desired outcomes.
Customer Acquisition Cost (CAC):
Calculate the cost of acquiring a new customer by dividing the total marketing spend by the number of new customers acquired. Monitoring CAC helps in understanding the efficiency of your customer acquisition efforts.
Return on Ad Spend (ROAS):
Specifically relevant for paid advertising, ROAS measures the revenue generated for every penny spent on advertising. A ROAS of 5:1, for example, indicates that for every £1 spent on advertising, £5 in revenue was generated.
Customer Lifetime Value (CLV):
Understand the long-term value of a customer by calculating the total revenue a customer is expected to generate over their entire relationship with your business. CLV provides insights into the sustainability of your marketing efforts.
Social Media Engagement:
Track metrics such as likes, shares, comments, and click-through rates on social media platforms. Engaging content and interactions contribute to brand visibility and can lead to increased conversion rates.
Developing a comprehensive marketing strategy is not just a precursor to successful campaigns; it is a fundamental tool for evidencing Return on Investment. By guiding tracking efforts, informing spending decisions, and establishing a measurement framework, a well-defined strategy equips marketers with the tools needed to quantify and showcase the impact of their initiatives. Utilising metrics such as conversion rates, CAC, ROAS, CLV, and social media engagement provides a clear picture of the effectiveness of marketing efforts and facilitates data-driven decision-making for improved ROI.
Want a freebie? Download our measurement toolkit to help you build a measurement framework around your business objectives so you can effectively demonstrate the value of your marketing here.