How to Measure and Understand Your ROI

Brandi Ruddick

Brandi Ruddick About The Author

Oct 29, 2020 9:30:00 AM


How to Measure and Understand Your ROI

One of the most important indicators of success for a business is its return on investment (ROI). ROI is the profit made after investing in marketing and other aspects of a business, which determines whether the investment is worth the cost. When it comes to advertising campaigns, the ROI can help determine if your advertising efforts are generating profit or holding you back.

If you can align your marketing efforts with your goals while keeping track of ROI, you'll likely see a gradual improvement. The key is understanding your ROI while clearly defining your goals to determine what to measure. According to a Content Marketing Institute study, 72% of successful companies attributed that success to monitoring marketing ROI

We'll go over how to set your goals, select the right KPIs depending on your goals, and understand and measure ROI based on both those goals and KPIs.

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Identify Your Key Goals

Each campaign will have a unique goal apart from simply generating new sales. As a result, you can't measure ROI based simply on the number of sales you make from your campaigns. The first step to take is to set specific goals for each campaign. Your goal might be:

  • Brand awareness — Your goal might be to simply raise awareness around your brand. You can do so by advertising the value you bring to customers and what makes you stand out from competitors.
  • Lead conversion — You may also want to convert more leads to customers. In this case, you might want to increase conversions at a specific point of the buyer's journey or reach a larger number of prospects.
  • To get customers into the marketing funnel — If you can attract more people to the beginning of the marketing funnel, you can increase the number of leads and the chance of making more sales.
  • Increase in web traffic — In some cases, you may simply want to increase traffic to certain pages or your website in general.
  • Increase in foot traffic — If you own a local brick-and-mortar business, your goal may be to attract more people to your store.
  • Increase in sales — In addition to converting more leads to first-time customers, you may want to encourage existing customers to buy from you repeatedly.
  • Growth on social media — Using social media properly can help you stand out among competitors and attract larger audiences.

Choose KPIs That Are Directly Related to Your Goals

Once you have clearly defined goals in place, you can decide on the key performance indicators (KPIs) that are connected to those goals. From there, you can use those KPIs to help calculate ROI. 

Email Campaigns

When running an email campaign, some KPIs to look at may include:

  • Click-through rate — The number of people who click through links in your email
  • Open rate — The number of people who open the email
  • Bounce rate — The number of people who leave the email as soon as they open it

Increase in Sales

If you want to increase sales, the following formula can help you calculate ROI:

(return - investment)/investment) x 100 = Total percentage of ROI.

Social Media Campaigns

For social media campaigns, you may look at:

  • Engagement rates — Could include any likes or shares for social media posts
  • New followers/fans — The number of people following your Facebook, Twitter, or other social media accounts
  • Leads acquired — The number of leads obtained with the help of CTAs and links appearing on social media

Increased Traffic for Landing Pages

If the goal is to bring more people directly to a landing page, KPIs worth measuring for each page include:

  • Traffic
  • Unique visitors
  • Time spent on page
  • Actions taken on the page

Understanding Your ROI

Measuring ROI can look different for each campaign, depending on the goals set for those campaigns. If you want to better understand your ROI, take the following steps:

  • Know the 'why'— If you can understand the specific intention behind your campaign, you can gauge the importance of each metric and use them to determine ROI for each tactic.
  • Make sure to measure consistently — You should analyze your metrics using the same method and platform for more consistent results.
  • Use a CRM system like HubSpot — Using the right CRM will help you automate certain processes, consolidate information, and improve the organization of data.
  • Revisit your goals regularly — Take the time to look back at your goals to confirm whether your campaigns are helping achieve them.

Knowing what to measure and how to measure  your campaigns can help you accurately determine ROI. Setting specific goals and identifying the best KPIs for each campaign can help with understanding ROI. Properly understanding and measuring ROI will ultimately help you plan your campaigns from concept to execution. If you would like some assistance with setting goals, deciding on metrics, and measuring ROI, turn to a trusted media partner for help. 

Ultimate Guide to Measuring ROI

Topics: Marketing ROI