Return on investment or ROI, is a critical, but often overlooked metric in the growth and viability of any business. While the most common metrics to measure the value of your business online are clicks, views, messaging and phone calls, unless these actions are measured against your return on investment, you could be missing out on future growth, or worse, suffering an unrecognized decline.
As the modern digital landscape becomes increasingly dependent on mobile search and social media interaction, businesses are investing in digital marketing services designed to boost site traffic, referrals, and search position. Without these things, a product or service can become almost invisible to the search community.
However, simply having all these marketing channels does not equal success. Practitioners also need to know:
- Which marketing channels are generating the most traffic
- Which marketing channels generate the most leads
- Which channels generate the greatest number of new and repeat clients or referrals
- The cost to implement each marketing channel
The primary marketing investments used by business online include search engine optimization, web design and development, on-site sales funnels, conversion optimization, artificial intelligence, as well as rich media buys.
These, and other similar marketing strategies such as the complexity of building a high-quality backlink profile have made it difficult for businesses to track and monitor their online ROI. In fact, many businesses don’t track their ROI at all.
There could be a number of reasons for this, but the main reason appears to be that with so many marketing channels in simultaneous operation, tracking ROI has simply become too complex.
Understanding ROI in the Marketing Process
When it comes to online marketing, your return on investment is the amount of profit (or loss) that your individual marketing channels have generated in relation to the amount of money you have spent on each channel.
In simple terms, are you getting value for money when you invest in digital marketing for your business or service? Far from being a metric that belongs to the realm of accountants, ROI is critical in not only measuring the success of any marketing channel but also informs your future marketing strategy.
A key factor in any ROI measurement is the measurement of actual results.
For example, according to previous research conducted by Dental Economic’s, more than half of the dental practitioners in the United States fail to monitor or even measure their online marketing investment outcomes with a quarter of those admitting that they do not actually know what is working for them online and what is not.
How to Calculate Your Marketing ROI
As noted above, for many, the reason is the complexity of the task and so businesses just leave it to the marketing agencies (or the accountant) to do the measuring.
But understanding ROI in the digital marketing process is vital for stakeholders who are aiming at deliberate growth.
Example:
If: The number of new customers is: 10
- And if: The lifetime New customer Value is: $880
- And if: The marketing Dollars Spent is: $1,000
- Result: 10 New clients X $880 ＝ $8,800
$8800 – $1,000 ＝ $7,800
- $7,800
- $1,000 = 7.8
- 7.8x
- 100 ＝ 780%
- ROI: 780%
And so, if that was your marketing ROI, your business would be netting 7.8 times the amount spent on your digital marketing efforts, or $7.80 for every $1 spent.
With this calculation in mind, you can now begin tracking the return on investment from your marketing efforts. With that in mind, you can now begin to look at ways to maximize your most profitable marketing channels.
ROI Metrics Worth Measuring in Digital Marketing
In order to know your marketing ROI, and maximize it, you need to know which channels to measure.
The most common channels for new client inquiries are:
1. Conversions from Online Reviews
According to research by Software Advice in 2020, over 70% of those surveyed used clinical reviews as the first step in evaluating which medical practitioner to use. This means that not only are your reviews social proof, they are also a valuable marketing channel.
Things to consider:
- Where (what channels) do people typically use to find reviews on your business venture
- How can you invest in reviews, feedback, and reputation management?
For example, if you discover that a social media platform like Facebook is being used to weigh up the reviews of your product, you might decide to invest in building the review tab of your Facebook page.
Calculate the time and investment needed to improve the number of people who leave reviews, your interaction with those reviews, etc. Monitor the incoming traffic from those review pages and the number of conversions you get, either directly from Facebook or via your website.
Follow the trail…
If you were getting 5 inquiries per month that led to a new client from Facebook and you invested in building your review platform, adding regular reviews, and calling for regular reviews on your Facebook feed you are then in a position to measure the results. Take those numbers and run them through your ROI calculator and measure the return.
2. Conversions from Your On-site Calls-to Action
There are a number of on-site conversion metrics you need to monitor before you decide to invest in site upgrades, edits, and changes.
- How many people visit your site per month?
- What pages are most popular?
- What buttons do people press or what links do they click when visiting your site?
- What are the most common exit pages?
Take a look at how much you are investing in these common areas of a website and begin to monitor, through Google Analytics, Heat Maps, etc, in order to determine which CTA’s (Calls-to-action) are most effective in getting the phone to ring or generating emails, online chat and other forms of direct Business-to-Customer inquiries.
Common Optimization strategies that impact your conversion.
A conversion is an action taken by a site visitor that you hoped your webpage would bring. Common optimization strategies to increase conversions include:
- A link to a survey
- Hyper-specific content category pages (see this example of a hyper-specific page on link building case studies)
- A contact form
- A Chatbot or live chat service
- A clickable phone number, and more.
It could be a button with a statement, “Call Now”, a naked URL, or a pop-up that advertises some special service or discount.
There are many things that can impact your conversion. Some of them are:
- Site color, layout, and overall design
- The position of important information such as features, benefits, and services
- Page loading speed
- Position of important calls-to-action
Some questions to ask are:
- What is the purpose of the page?
- How many actions or decisions are you asking the site visitor to make? (the less the better)
- How well written is your site content?
- Are your calls-to-action clear and concise?
Once a page has been properly and professionally designed, you are then in a position to start measuring your return on investment.
How to Measure Your ROI for Site Design
Once you have a clearly formed vision for your website, you can begin to consider the likely ROI on a site upgrade or redesign in order to optimize conversions or new inquiries.
- Calculate the cost of the redesign
- Isolate the conversion factors (Phone, email, chatbot, other calls-to-action)
- Create a sales funnel for each CTA
- Monitor and measure the number of new client inquiries or bookings that came through those newly added features.
If, for example, you found that no new business was realized through your amazing new contact form, but you increased phone conversions or live chat inquiries, you now know where to invest the next dollar of your digital marketing budget.
Also read – How to outsource your website development work
3. Phone Conversions
It’s important not to measure the number of phone calls alone when evaluating your ROI. Phone calls are an important conversion factor. You may receive ten new calls a month, but if none of those results in a new customer, that doesn’t mean you have a problem with your website.
Maybe you need to revisit your telephone script, staff communication skills, and more – each may involve a new investment which would lead to a new ROI measurement.
Again, don’t expect to master measuring and boosting ROI quickly. It takes time, deliberation, and many small, incremental steps and changes in order to develop an eye for what is bringing you the best return for your investment.
Your Return on investment related to phone conversions should be broken up into smaller parts, each with its own cost. Some costs you would want to measure include:
- Staff Training
- Digital or virtual telephone systems
- Scripting the sales funnel
- Scripting verbal communication
- Additional sales communication training
Other areas where you should explore the likely ROI are with newer AI technology and virtual telephone systems where many customer inquiries can be satisfied with either minimal or no human or person-to-person interaction. Research each strategy and take a look at the success or failure of such technologies within your industry in order to make the choices that are most likely to boost your own business ROI.
4. Email and Messaging Conversions
Email remains one of the most inexpensive and effective conversion, client and customer acquisition and retention strategies. With an average marketing campaign the ROI is 124%; an effective email campaign is four times higher than all other forms of digital marketing.
However, not all email marketing strategies are equal. The effectiveness of your campaigns, along with the cost of the resources you are using need to be measured by their return on investment.
Also read – Best email marketing tools for business
Some basic questions to help assess your email marketing ROI are:
- How much time and money is spent on current email campaigns?
- What are your open and response rates?
- How are emails formatted and designed?
- What CTA’s and messages are presented to recipients in your campaign?
- What is the overall impact on revenue?
In order to establish an effective email campaign for your online enterprise, you must set measurable goals that not only generate revenue but that are also tailored to your business service or product.
Ask yourself, why are you emailing your customers or clients? Is to educate? Move them to a clinical appointment booking? Promote new services? The answer will inform your branding, design, content, and call to action.
Email campaigns that generate good ROI tend to:
- Focus on a single goal (such as a new appointment or product)
- Have a clear and concise call to action
- Answer the most significant roadblocks conversion
You will need systems in place to track and evaluate these components in order to further clarify your KPI’s KPI’s (Key Performance Indicators). Key Performance Indicators are the critical (or key) indicators of progress toward the desired goal. They ensure your campaigns are focused on conversions, commitment or engagement and create the foundation for your future campaign analysis. In short, they help you as a business owner to focus on what matters most when it comes to measuring your success and a positive ROI.
Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against that target.
Your ROI will also prove more effective if you avoid implementing a generic email plan and instead focus on segmentation based on different types of clients.
Putting it into Action
Measuring your ROI is not a one-off event. You need to monitor your RIO calculations over time because while there are “best practices,” there is no 100% guaranteed way to get optimal RIO right the first time around.
A few additional tools may come in handy – provided you or someone within the marketing team knows how to use them well.
- Tracking pixels
- CRM Software
- Facebook Insights
- Buzzsumo
- Google Analytics
- Email marketing software
Constant evaluation of your conversion rates for phone, email, and other digital channels needs to take place so you can improve poor performance and maximize new opportunities as they become apparent.
