Marketing 7 min read

How to Efficiently Calculate Marketing ROI

Image by RoseRodionova | Shutterstock

Image by RoseRodionova | Shutterstock

In many cases, it can be a real struggle to pin down your marketing results, especially if there’s no direct response or purchase to measure. This article breaks down the process and explains how to calculate marketing ROI.  

Measuring results and proving ROI on marketing campaigns can be complex, but it doesn’t have to be. You just need to figure out how you can track and measure your campaign’s impact.

First things first, let’s refresh our brains.

To calculate marketing ROI, or return on investment, you need to measure how your business is performing. ROI measures the efficiency of an investment by comparing the return on the investment to the cost.

By calculating ROI, you can determine whether your investment has had a positive impact or if it wasn’t really worth it.

In the basic formula used to calculate marketing ROI, the return of an investment is divided by the cost of the investment.

Here’s the what the ROI formula looks like:

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment

The result is expressed as a ratio or percentage.

It’s important for your business to calculate ROI so that you know how to move forward in the future. ROI lets you see what investments have paid off, what investments could benefit you moving forward, and what investments you should avoid.

If only it were as straightforward as inputting numbers to a handy little formula!

However, in many businesses, like marketing, we don’t sell a tangible product or receive a direct response. This means that the figures can be hard to calculate. In this case, to calculate your marketing ROI, you need to turn to data collection and analysis.

Step 1: Set Your Marketing Objectives

small white arrows following one orange arrow
As the saying goes, you can’t score if there’s no goal. Know your objectives before you set out to calculate your marketing ROI | Image by patpitchaya | Shutterstock

Before you can measure your ROI, you need to figure out what exactly you’re measuring.

Let’s return to the formula: ROI = (Gain from Investment – Cost of Investment) / Cost of Investment.

So first, we want to calculate the gain from investment.

To easily measure the positive impact of the investment, we can return to the objectives of the overall marketing campaign.

If you have previously outlined a clear marketing strategy for your campaign, this will be simple. However, if not, here are some elements you may want to look at.

Even though all business will measure different things, the most popular objectives marketers measure are:

  • Brand Awareness: how popular is your brand in your niche? You can investigate this by checking how popular you are on social media or how many discussion forums your brand is mentioned in. You can also look at reviews as an indicator.
  • Lead Generation: how many leads are your campaigns generating? Leads are potential buyers or customers.
  • Engagement: how engaged are your customers or audience? If your marketing campaign has had a positive impact, you can expect to see more comments, likes, and shares.
  • Customer Acquisition: how many customers did you acquire through your marketing campaigns? Compare your customer base or audience before the campaign began to its current number.
  • Niche Influence: Do people respect your voice in your niche market? For example, look at how many people trust HubSpot’s voice in the SEO space. Do people link to your content or cite you? Do your customers refer you to friends?
  • Website Traffic: Are your campaigns successfully driving traffic? This is a key measure of ROI for bloggers and content creators. If traffic is not growing then, obviously, the campaign is not effective.
  • Sales: Are your campaigns resulting in sales? For an e-commerce business, this will be a key measure of ROI.
  • Customer Retention: How many of your customers are staying with the company?
  • Repeat Customers and Returning Website Visitors: How many of your customers repeatedly buy from you or revisit your website?

Read More: 7 Customer Retention Strategies That Leverage Social Media

Basically, the more objectives you reach indicates how successful the investment you made in your marketing campaign has been.

Now, you’re probably wondering how you can measure these objectives to calculate your ROI. Don’t worry, there are plenty of tools out there to ease the workload!

Step 2: Implement Analytical Tools

Man holding tablet using software for ROI analysis
There are plenty of tools out there to help you get a better idea of your audience and ROI |Image by Khakimullin Aleksandr | Shutterstock

The next step in calculating your marketing ROI is using analytic tools to measure each of your objectives.

  1. Facebook Analytics — Here you can get a deeper understanding of how users interact with your business across your website, app, and on this social media platform. This tool can be helpful in measuring objectives such as brand awareness, niche influence, and user engagement.
  2. Google Analytics — In general, this tool is useful to businesses of all sizes to understand customers better. It can be used to measure objectives such as website traffic, repeat customers, and customer retention. You can find out more about how to use the tool here.
  3. AHRefs — This is a tool that can help you to grow your search traffic. However, it can also help you to monitor your niche and compare your data to your competitors. This tool will help you measure objectives like niche influence, customer acquisition, and your ranking position in SERPs.
  4. SEMRush — This will help you to figure out your competitors’ keywords, backlinks, ad text and much more. Intelligent competitive analysis can be used to analyze the outcome of your objectives. Here’s part one of Edgy Lab’s five-part guide to SEMRush: Analyzing the Must-know SEMrush SEO Ranking Report Part 1
  5. Customer Relationship Management Platforms (CRMs) — Platforms like Salesforce are also very useful in measuring your objectives. They provide all the customer information you need.

These are five tools to get you started. You can find more here:

Read More: 5 More Social Media Analytics Tools to Maximize Engagement

Step 3: Analyse Your Findings

Magnifying glass along with some analytics tools
With all of the information you gained from the above software tools, you’ll be ready to start calculating your marketing ROI | Image by Max Griboedov | Shutterstock

So, you have all the valuable insights you need thanks to those nifty analytical tools. Next comes the fun part. You need to analyze your analytics report to select measurable insights. Now you can use this data to measure your ROI.

Depending on your individual marketing campaign, finding measurable insights could take anywhere from one day to three months. But, I promise the wait will pay off and you will finally be able to calculate your marketing ROI.

Read More: 7 Extra Ways to Promote Your Content

In marketing, there usually isn’t an obvious figure you can use to measure ROI. However, as we explained, this shouldn’t stop you from calculating your marketing ROI.

By determining your objectives, measuring them using analytical tools, and analyzing the results, you can draw valuable insights and calculate marketing ROI. This will help you to properly allocate budget in the future and ensure your selected marketing campaigns will pay off.

By using this data-driven approach to calculate marketing ROI, your business can stay on track of what’s working and what’s not.

What do you find is the best way to calculate marketing ROI?

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