Marketing return on investment (ROI) is a measure of how much you gained or lost as a result of your marketing efforts, so increasing your ROI is crucial for marketing success. While every business wants to increase marketing ROI, figuring out how to do so can be tricky.
In this post, we’ll give you five effective strategies for how to improve your marketing ROI:
Keep reading to learn how to get more out of your marketing!
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What is ROI in marketing?
ROI in marketing is a measure of the profit or losses resulting from your marketing efforts. You can calculate ROI by dividing your total costs by your net profit, which is your costs subtracted from your profit. You can then multiply by 100 to get a percentage. The formula looks like this:
((Profit – Costs)/Costs) x 100 = ROI
So, for example, if you invested $1,000 into a marketing campaign, and you earned $2,000, your calculations would look like this:
(($2,000 – $1,000)/$1,000) x 100 = 100%
Your marketing ROI tells you how much money you’re making or losing due to your marketing efforts. It effectively shows you whether your marketing tactics are working.
How to increase your marketing ROI
To increase marketing ROI, you need to either increase your income or reduce your costs. If your marketing efforts are inefficient, you may want to work on reducing your costs. Otherwise, it’s a good idea to focus on increasing your income.
Keep reading for five specific tips on how to maximize ROI for your digital marketing efforts.
1. Set ROI goals
When you want to increase marketing ROI, it’s helpful to set an ROI goal. Having a well-defined goal can help you develop a plan for accomplishing and tracking your progress. When you set your ROI goal, make it a SMART goal — one that is specific, measurable, achievable, relevant, and time-bound.
- Specific: Instead of something vague like ‘increase ROI,’ your goal should be something specific like ‘increase ROI by 25%.’
- Measurable: Make sure you can measure your progress toward your goal. Have the right data collection and reporting methods in place.
- Achievable: If your goals aren’t realistic, they won’t do you much good. Your goals can be ambitious, but make sure you can realistically achieve them.
- Relevant: Your ROI goals should be relevant to your overall business goals. For example, if your main objective is to increase sales, getting more Instagram likes isn’t a relevant goal unless it contributes to sales.
- Time-bound: Establish a timeframe within which you’ll aim to reach your goal. Making your goals time-bound provides motivation for completing them in a timely manner.
2. Make an ROI tracking plan
If you’re not tracking your marketing ROI, you won’t know if you’ve successfully increased it. Creating a plan for tracking your ROI is crucial to improving it. Determine which digital marketing ROI metrics you need to track.
Some common metrics include sales, website traffic, and leads, but the right ones depend on your goals and the type of campaign you’re running. You also need to make sure you have the right tools for tracking ROI.
One of the best available tools for ROI tracking is Google Analytics. To track ROI using Google Analytics, you’ll need to set up tracking for the conversions you want to measure, whether that’s sales, leads, or another conversion type. You can track ecommerce sales with the Ecommerce report. For other types of conversions, you’ll need to set up Goals. After you’ve collected some conversion data, you can look at your data to see how much various channels and campaigns contributed to your conversions.
Go to the report under Conversions > Multi-Channel Funnels > Assisted Conversions and then select Conversions at the top of the report. This will show you conversion data for each channel.
You can also look at the Top Conversion Paths report to see the steps that led to conversions.
3. Focus on metrics that matter
If you want to increase your marketing ROI, be careful when choosing what metrics to track. Ensure these metrics truly reflect progress toward your most important goals and are not just vanity metrics that look good but provide little value. The right metrics to track depend on the goals of your campaign.
If your goal is to increase revenue or sales, you may want to track metrics such as:
- Conversion rate: The percentage of leads or site visitors that convert
- Cost per acquisition: How much it costs you to acquire a new customer
- Customer lifetime value: How much a customer is worth to your business over the entire length of time they’re a customer
If your goal is to increase brand awareness, you may want to track metrics like:
- Direct traffic: The number of users who come to your website directly, such as by typing your website’s URL into their address bar
- Referral traffic: The number of users who come to your site via links on other sites
- Social media mentions: The number of times users mention your brand, product, or service on social media
The digital marketing ROI metrics you track influence how you work toward your goals. So, measuring the right metrics ensures you know how to improve ROI in digital marketing.
4. Use marketing automation technology
The marketing automation market is expected to be worth $6.4 billion by 2024. There’s a good reason this market is growing so quickly — these tools can help marketers accomplish more with less and maximize ROI by making marketing processes more efficient and precise.
Marketing automation tools can take care of repetitive tasks and analyze data to help you improve your campaigns. For example, email automation tools can send emails to prospects at pre-determined time intervals or when they complete certain actions on your site.
Since your team doesn’t have to send these emails manually, these automation tools can save them significant amounts of time. Marketing automation can also help in numerous other areas, including content personalization, lead tracking, and audience segmentation.
5. Run experiments frequently
One of the best ways to increase marketing ROI is to experiment frequently and use your findings to improve your campaigns.
Try out new channels and make adjustments to your campaigns to see what works best for your audience and goals. A/B testing is an excellent way to test and refine your campaigns. It involves creating two or more versions of a piece of content, say an ad, email, or web page, and showing each version to a different randomized group of users.
Throughout the test, you track clicks, sales, or whatever digital marketing ROI metrics are important to your campaign. At the end of the experiment, you check your results to see which version performed better. You can then make the best-performing version the permanent one and go on to test another aspect of your content or campaign.
Google offers a free tool called Google Optimize that you can use to conduct A/B tests and other experiments. Here’s a report from the tool about a test that involved the way pricing is displayed on a page:
Continually running tests and refining your campaigns helps you to increase marketing ROI consistently over time.
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Increase your marketing ROI with WebFX
Another excellent way to increase your marketing ROI is to work with an experienced Internet marketing company that focuses on getting results. At WebFX, we have more than 25 years of experience in helping clients improve their marketing ROI, and we love sharing the insights we’ve gained along the way.
Our marketing plans drive results, too — we’ve driven over $3 billion in sales and over 7.8 million leads for our clients in the past five years. If you want to learn more about how our digital marketing services can help you grow your business, get your free quote today.