Table of Contents
- What is ROI?
- Steps on how to improve ROI in digital marketing
- Digital marketing ROI metrics
Many organizations use digital marketing, but not everyone knows how to improve ROI In digital marketing. It’s very common nowadays for brands, small businesses, major companies, and organizations to use digital marketing to create awareness for the products, services, or messages and they spend huge sums of money to promote their digital marketing campaigns. Like all investments, they would love to see a return on their investments but unfortunately, they do not see any value for their money because they do not know how to improve their ROI.
This is all because they fail to utilize any of the benefits of mobile marketing and they simply use strategies that are either not suited to their organization or simply have no idea what they’re doing. They are just using digital marketing just for the sake of using digital marketing and that’s understandable because digital marketing is a relatively new aspect of marketing and many organizations have not taken the time to understand what strategies or concepts to apply to give them the best results. In this article, we would be discussing steps on how to improve ROI in digital marketing for your brands, small businesses, organizations, and much more.
What is ROI?
ROI is short for Return on investment. A return on investment is simply a metric that is used to measure the profitability of an investment made in a venture. It can also be used to measure the profitability of a particular investment amongst other investments being made.
Receiving an ROI or return on investment is the major priority of every investor. It is often expressed as percentages and is calculated by dividing the investments net profit or loss by the original amount invested. It does not take into account the amount of time involved so the opportunity costs of investing in other ventures would not influence the result of the ROI.
Steps on how to improve ROI in digital marketing
- Choose your target market
- Create a strategy
- Set your marketing goals
- Test and make adjustments
- Analyze your marketing data
- Improve your customer service and experience
There are many steps to improve your ROI in digital marketing however, I’ve summed them up into these steps because they provide the framework for you to start seeing results in your digital advertising ROI as soon as possible. You can choose to follow these steps from top to bottom or you can select a few that you feel your organization is lacking and work on them individually.
Choose your target market
This is one of the steps that many companies fail to take in their digital marketing campaigns. It is the most important step to take when you begin thinking about making your digital marketing investments. Knowing who you’re targeting is key because, without that, your marketing journey would be full of trial and error and that would only slow down your advertising success and you would see little to no ROI from your digital marketing campaigns.
As an organization, you need to be as specific as possible when it comes to who you’re targeting for your marketing because without that you’d be shooting an arrow with no target in sight in the middle of the desert and still hoping to kill something. This is why you need to sit and think about who exactly your marketing should be targeted toward and what problems your organization is solving for that target market. This would help you cut down a lot of time in trial and error and help you when you’re creating a marketing strategy. The key to accomplishing this is to be as specific as possible when you’re describing your ideal customer, not leaving any detail from this description.
For example, assuming your business deals with used car parts, then you would be targeting car owners, mechanics, and car enthusiasts. If your business can also handle international shipping then you can include a worldwide demographic in your target market description but if not then your organization can just stick to your local demographic. You can also analyze the specific age group of these car owners using the legal driving ages according to your constitution or laws guiding your geographical location as a guide. If the organization sells parts for a specific brand of cars like Toyota, KIA or Mercedes then also include that in your customer description.
As you can see from my example, I tried to be as specific as possible in my description narrowing it down to the type of car being used by the customers. You also need to be specific as possible so you could optimize your marketing process, speed things up in terms of creating your digital advertising campaign, and setting up a strategy. This would help you see a return on your investments as soon as possible.
Remember that the key to succeeding in this is being specific in your description of your ideal customer from their age ranges, to their preferences and more. Make sure to do your research where you need to because you may not know everything about your customer.
Create a strategy
Once you have been able to identify your target audience, the next step would be to devise a strategy or multiple strategies that would help you make the best of the said target audience. When you are creating a marketing strategy, It’s best to study the character and habits of your target audience and see how your organization could optimize its campaigns using the information that you already possess from the data you’ve gathered.
Your digital marketing strategy should include keywords that get the best reactions from your target audience, highlighting or expressing in video, audio, or text formats how your company or organization solves the problem that they have and in as much detail as possible, how they can access the solutions that you provide. This would involve you taking time out to do research to find out what formats (video, audio, or text) fit your target market and also knowing how to use this information to create original and valuable content that your audience would appreciate.
There are many ways that you could go about this. Some organizations may choose to conduct surveys, webinars, polls, Q and A sessions, and live social media broadcasts which helps to ask your existing and potential customers what they are interested in seeing the most and it would also help in identifying the kind of content and formats that are suitable for the said target audience. Another route would be taking to influencer marketing which is basically sourcing out public figures that have a large influence on your target audience and paying them to endorse your organization. This way your company does not necessarily have to worry about your advertising content as much and could just stick to engaging your target audience through their influencers. Many companies do this by making deals to have brand ambassadors that create the content needed for marketing themselves.
There are many ways to go about creating a strategy that would engage your target audience but the best part is that you can create more than 1 strategy and simply choose the most successful strategy to work with.
A key thing to take note of is that once you have successfully found a way to connect to your target audience, the best way to maintain that connection is to have a stable way of communicating with your existing and potential customer base using email newsletters, text messages, and more. This would ensure a deeper or more personal connection with your market.
Set your marketing goals
When learning how to improve your ROI in digital marketing, setting goals is a step that can not be ignored. Every advertising strategy should be used or created with a goal in mind. Just like in the case of identifying your target audience, Implementing your marketing strategy without a goal in mind is like shooting an arrow without a target. It doesn’t make any sense.
I know you’ve heard of multiple ways to set your goals but in my experience, that is what has worked best for many advertising companies. The key is specifying what you want your marketing strategy to accomplish before it is created. This is the best way to get value for your money in terms of your digital marketing investments.
There are multiple goals that your organization can have for its marketing strategies. Some may be purely for traffic, to create brand awareness, some may be to make sales, and some may be to gather information necessary for the creation of more marketing strategies. These goals vary depending on your organization but the most important thing to note is that you need to have a goal in mind. Having a goal in mind would enable you to measure the success of any advertising campaign or marketing strategy that you’ve launched which would, in turn, give you direct feedback on whether or not you’ve made a return on your investment.
Test and make adjustments
At this point, you may have launched one or more advertising campaigns depending on your strategy. The next step is to pay attention to the data that you would be provided by these mobile marketing platforms. The data would provide you with invaluable information that you could use to determine the success of your advertising campaigns depending on the goals for the advertising campaigns.
Now, when you are launching your marketing campaigns it is best to have more than 2 campaigns set up and made live. Each should have a very little advertising budget. Doing this would enable you to know which of the few campaigns you’ve launched brings in the best value (depending on your goal) for the money invested (ROI). This way, you would be able to know where to focus the bulk of your advertising budget and possibly edit the rest using the successful campaign as a blueprint. For example, If the goal of an advertising campaign is simply to generate traffic, then the click-through rate or the amount of traffic that each advertising campaign offers would be the basis for judging each campaign. This would help to know the campaign that was successful and that would determine where the bulk of the advertising budget would go.
This system would save you hours and resources on trying to fix just one advertising campaign and help you make the best of the marketing strategies available and help to improve your ROI.
Analyze your marketing data
This step simply builds on the previous step. There are a lot of applications for the data that you receive from your advertising campaigns and this is really what helps you understand how to improve your ROI. For example, when you are creating new marketing campaigns, the data that you’ve gathered from your campaigns (successful or unsuccessful) could help you optimize any future campaigns to provide the best results in the shortest time possible.
It is key to note that no advertising strategy should be regarded as a failure because a successful strategy is dependent on the goal intended. This means that where one strategy fails in traffic, it might excel in engagement, impressions, or even sales. Therefore, just like many perceived failures in life, there’s always something to learn. These lessons learned would help you create more marketing campaigns successful.
It is advisable to spend as much time as possible analyzing and reporting the data that you’ve gained from the advertising campaigns that you’ve launched, organizing the data by the goals they are intended to reach. This way, when you need to create a new campaign you can simply select and use data from existing marketing campaigns that have provided good results before because those are the campaigns that would help you create good campaigns in the future with the best ROI.
Improve your customer service and experience
Many people may not know this but there’s a huge difference between customer service and customer experience. This could serve as a topic on its own. I’ll try to be as detailed as possible so you can completely understand how to make the best of the two concepts and use them to improve your digital marketing ROI.
Customer service is the more passive of the two (customer service and customer experience). It has to do with how you respond to your existing or potential clients. It’s like a game of tennis but in this game, you have to play the receiver and not the server. Your customer service is responsible for receiving and handling inquiries, complaints, and more from customers, clients, or members. Now you may be wondering how your customer service could affect your Digital marketing, well here’s how.
A great part is marketing is customer retention. Acquiring new customers or new clients may be difficult but maintaining them would be even more difficult because you need to engage with them, and answer their basic inquiries or solve their problems and this is where your customer service comes in. For example, when you acquire a new customer, they would more than likely have questions about your brand that your advertising campaigns would not be able to cover and this is where the quality of your customer service would shine best.
Now customer experience is like customer service but on a deeper level. Customer experience takes it a step further from where customer service stops. With customer experience, you become the server and the receiver at the same time. This is the more active approach. It is a sure way to make sure that you make a return on your investment.
Customer experience involves you reaching out to your clients and seeing how you can build better relationships with them. It involves you making the effort to send emails on their birthdays, keeping track of their progress, and rewarding them with gifts to encourage their commitments. Customer experience also involves you adding a personalized touch to your web pages to suit your clients. It would make sure that new clients keep coming and existing clients keep coming back.
When you combine sublime customer service with an excellent customer experience, you’ve created a sure path to victory or in your case seeing a return on investment from your advertising campaigns. When it comes to knowing how to improve ROI in digital marketing, this step adds the cherry on top of all these other steps mentioned above. All you need to do is take a step back and analyze your entire organization to know what step your company or organization missed out on or is falling short of and find a way to make the situation better. It may take some time but the sacrifice would definitely be worth it.
Digital marketing ROI metrics
It’s one thing to know how to improve ROI in digital marketing but it’s another to know how to accurately measure your success. You can never truly know the distance you’ve completed until you’ve included the meters at the end of the number. So here are a few of the digital marketing ROI metrics you should be aware of.
- your cost per lead
- cost per acquisition
- customer lifetime value
Your cost per lead
As the name implies, your cost per lead simply means what you spend to get a lead.
For your digital marketing campaigns, you can track this metric directly using Google AdWords or social media advertising platforms. For Google AdWords, this metric is called, “cost per conversion” or CPC for short. You can also calculate CPL (cost per lead) by dividing total ad spend by total attributed leads.
This metric is usually associated with paid advertising campaigns as you don’t exactly need to pay to get organic traffic. But you can also apply this metric to other digital marketing concepts because in one way or another they also contribute to the leads that are being generated for your company. you can do this by calculating the total investment in an advertising campaign divided by the leads generated by it.
This metric is very important to know because at some point in your business you may need investments and many investors would be are interested in your cost per lead because if it is really high then it would mean that the marketing team may not be the best at handling a budget or that the marketing strategies are simply not as effective as they can be and they may be skeptical. This is why you need to first focus on how to improve your ROI in digital marketing to ensure that your cost per lead is reasonable.
Cost per acquisition
Now, more often than not, people confuse cost per lead with cost per acquisition, and understandably so because they are very similar. However, cost per acquisition focuses on actual conversion and not just lead generation. What this means is that the sale has to happen before it’s considered an acquisition. So when you are trying to calculate your cost per acquisition, you would not be including the leads who did not make a purchase, you would be including the leads who actually bought from your company or business.
This metric can be calculated by your total marketing cost for that campaign divided by the sum of all the customers that were acquired within the period that the campaign was live.
Customer lifetime value
This is a metric that most businesses should be interested in because it provides a projection of the profitability of a customer in the long term. The reason this metric is so important is that it helps you decide if marketing to a specific target audience is even worth it in the first place. For example, if my customer lifetime value is low for a specific advertising campaign, that is, what I spent to acquire the customer is less than what I gained from the said customer then acquiring the customer would not be worth it in the first place and the said advertising campaign would not be worth investing in for the future because of the low long-term potential of the customers acquired.
It is vital to note that there is no 1 way of figuring out what the customer’s lifetime value is because many businesses have come up with their own unique ways of determining this value.
These are a few digital marketing ROI metrics that you should be aware of because they impact the ROI that you would be expecting for your advertising campaigns and they can also help you to determine how to improve ROI in digital marketing.