More data is available to businesses than ever before that can be used to create a highly competitive marketing plan and gauge its effectiveness. Return on investment, or ROI, is an invaluable way to measure the profitability of these marketing strategies. No to the Quo is here to answer just what is ROI, how it is measured, and how you can use it to kick your business’s ROI into high gear.
What is ROI In Marketing?
ROI is a measurable indicator of how well a particular investment performs in relation to the investment’s cost. A simplified way to calculate the ROI is to divide what you get out of the investment, net profit, by the total cost. The higher the percentage, the better your investment has performed. Conversely, negative results translate to a net loss and an ineffective investment.
So, what is ROI in marketing terms? Marketing ROI is key to designing, improving, and measuring specific marketing strategies for your business. You can improve your chances of a profitable ROI by focusing on top marketing metrics that will help define investment benefits and limit costs.
List of Top Digital Marketing Metrics
While it’s always best to collect as much information about your business as possible, some metrics won’t necessarily give the same level of insight into ROI as others. So, using those metrics most relevant to your business’s marketing costs and benefits can bring greater clarity and accuracy when calculating marketing ROI.
Cost Per Lead
Cost Per Lead, or CPL, measures the average cost of generating each potential customer through digital marketing avenues, such as Google Ads. Optimized CPL helps minimize cost and increase lead generation, making for a more effective ROI.
Lead Close Rate
The lead close rate is the average number of leads that generate sales. This is a vital metric for understanding how well a marketing campaign performs compared to sales goals. So, the higher the close rate, the better it is for your marketing ROI.
Conversion Rate is the percentage of online users performing a particular action on your business’s various channels or devices. So, for example, if 100 users visited your website in a day and 30 visitors made a purchase, then it’s a 30% conversion rate. So, ROI benefits greatly from higher conversion rates, especially regarding sales.
Cost Per Acquisition
Cost per Acquisition or CPA divides marketing cost by sales from customers acquired through a marketing campaign. By showing you the cost of gaining a new customer, this rate lets you gauge the efficiency of marketing strategies and how they affect your business’s ROI.
Average Order Value
Average Order Value (AOV) is a crucial metric for evaluating marketing success and ROI. AOV is the average amount each customer spends at a given time. The average is calculated by dividing total revenue by the total number of transactions.
Customer Lifetime Value
Customer Lifetime Value (CLV) calculates the average total amount each person might generate during their “lifetime” as your customer. So, CLV gives you a long-term glimpse at ROI by evaluating a customer’s average transaction amount, number of transactions per year, and years the customer has been active.
Return On Ad Spend
Return on Ad Spend or ROAS measures the amount generated for each dollar spent on an advertising campaign. ROAS is a great way to evaluate the effectiveness of current marketing strategies while providing input crucial to building future marketing plans and optimizing ROI numbers.
Customer Retention Rate
Customer Retention Rate gives insight into how many customers your business has kept during a set period. The formula compares total customers at the beginning, the end, and those gained during the time frame. The resulting percentage can help show the effectiveness of particular marketing strategies and give clues to how to boost ROI.
N2Q Can Help You Achieve Your Marketing Goals
We know that the prospect of digital marketing can be frustrating and downright frightening. Yet our marketing experts have an arsenal of marketing tools to help you develop the best strategies for your business. We tailor our industry-leading N2Q services to fit your goals and put you in the best possible position to succeed.
We’ll perform a comprehensive audit of your digital platforms to prioritize needs better. In addition, our team will help you optimize your web-based channels and build a stronger, more efficient digital presence. With a keen eye on expanding your ROI, together we’ll create the ideal environment for implementing our robust marketing tools, including:
- Search Engine Optimization
- Social Media
- Website Design
Search engine optimization, or SEO, is a vital part of digital marketing that seeks to improve your website’s placement within search engine results. The higher your website appears in search results, the better chance you have of users visiting your website and, in turn, generating sales. Our SEO team is loaded with search engine optimizing all-stars, ready to elevate your search results position.
N2Q is also home to social media gurus who understand not every social media platform is right for your business needs. Our team will partner with you to formulate the best social media strategies to build brand awareness, drive traffic to your website, and help bolster your ROI.
Pay-per-click (PPC) is an advertising tool that can help drive customers to your website through internet ads. The best part is that you are only charged when users click on the ad. Used effectively, it can be a powerful and cost-efficient marketing tool. We’ll work with you to develop the PPC program that gets you optimal results.
Your website is how prospective online customers are introduced to your business, so it needs to deliver a great first impression. Your website also needs to keep them coming back for more to improve your ROI. So, our website design team emphasizes developing the best design, content, navigation, mobile compatibility, and website management to offer your customers the most optimal user experience.
Boost Your Digital Marketing ROI With N2Q
What is ROI? It is the key to understanding the health of your business so you can plan for the future. So, let the N2Q team help you put marketing metrics to work for your business. Contact us today to learn how we can unlock the true potential of your business’s ROI.
Digital Marketing No To The Quo