How much is your digital marketing plan going to create revenue for you?
Every digital marketing plan should track return on investment. ROI is a measure of how much revenue a company makes after all the expenses, and provides clarity on worthiness of your investments. Positive ROI confirms the company is on the right track.Negative ROI confirms that you need to reevaluate your marketing strategies, that includes assessing the ROI of individual digital marketing campaigns. Which digital marketing metrics should be used and how these can be assessed in terms of return?
Techsaga, with 12+ years of expertise and knowledge is a Digital Marketing Company, helps you transform your business that delivers a measurable amount of an investment, through business-centered digital marketing solutions.
In this post, we’ll discuss some vital digital marketing ROI metrics and explain how to use them to assess your return. To help you gain valuable insights into your marketing campaigns, we provide a suite of advanced marketing tools.
To know more, keep reading the blog!
How to calculate ROI?
The basic ROI formula includes subtracting the money you spent from your return from your earned money. Then, dividing that result by your investment, followed by multiplication of 100, will give conversion of ROI to a percentage. Calculating marketing ROI is not simpler, rather tricky as it involves numerous campaigns over the long and short term that may contribute to one sale.
Calculating ROI over the long term
If you’re calculating your digital marketing ROI over a long term, adding marketing expenses and revenue.
Calculating ROI over the short term
Specifically, if the ROI of a specific campaign needs to be calculated through different digital marketing metrics and key performance indicators (KPIs) to determine its value.
Few useful digital marketing KPIs are:
- Website visitors
- Conversion rate
- Cost per lead
- Customer lifetime value
- Brand awareness
Lead generated in a campaign has its own conversion time. Lead may enter your marketing funnel and can get converted after several years down the line, depending on various campaigns and types of content.
For example, prospects can click your ad, signing up for your email list.
Few weeks or months later, clicking on the link provided in the email will land them on your website blog. From that landing page,further they may take interest in free trial. Finally, after the trial phase ends, they may make a purchase.
So, the lesson learned is immediate conversion/sale is not expected, and it's still valuable. Above example shows that you might consider someone clicking an ad followed by registering with an email and signing up can be considered a successful conversion. Your conversion rate for your email list signup can be one of your KPIs metrics for your specific digital campaign.
Calculating digital Return On Investment over the long term can work, if your business has a long buyer’s journey. However, calculating ROI for specific digital campaigns helps you to track or meet your goals.
Tracking the Digital marketing ROI metrics, helps you improve your campaign effectiveness and accuracy.
Here we discussed 7 most useful marketing success KPI or metrics for calculating ROI.
1. Average sale price
Average sale price is a relatively simple metric, but offers accurate numbers while calculating your digital ROI. Your average sale price is the average gross revenue for a sale. Add gross sales revenue for a specific campaign run for a specific time and divide it by the total sales.
Average calculation allows you to know the amount for differences in price due to sales, discounts, and product variation.
2. Customer lifetime value
Customer lifetime value (CLV) measures customer;s worth for your business in their journey as a customer. To calculate CLV, average revenue from a customer in a year multiplied with the average number of years your customers stay with your company.
Then, subtracting the cost of retaining that customer from that final number.
3. Cost per lead
Cost per lead (CPL),also referred to as cost per conversion, is typically used for paid traffic. CPL is the cost incurred to the company to acquire a lead or a prospect — a user who expresses interest in your products, services, or company and may become a customer. To calculate this, divide the number of leads acquired in a defined period of time by the ad spent over the same period.
4. Lead close rate
Your lead close rate is the percentage of your leads which make a purchase. To determine your lead close rate, divide the total number of leads by the number of closed leads, multiplying with 100 to get the percentage value of Lead close rate..
5. Cost per acquisition
Your cost per acquisition time spent on ads to gain a new customer. Calculating CPA digital marketing metric, is to divide your digital marketing costs for a campaign over a period of time by the number of conversions earned during that period or campaign.
If your cost per acquisition is lower than your average revenue from a sale, Your ROI is positive.
6. Cost per click
Your cost per click (CPC) is the amount you spent on single clicks by the user on your pay-per-click ad. To determine metrics of CPC, calculate total cost of your clicks over a given period dividing by the number of cost per click (CPC) . CPC calculator helps you to calculate CPC in a quick and effective way. If a company is using Google Ads,Google Analytics can help you get the CPC data, alongside other useful information about your ad campaigns.
7. Conversion rate
Your conversion rate is the percentage of visitors that convert, and make a purchase, and sign up for an email list. This metric is similar to lead close rate, but the key difference here is that one measures lead close rate over a long period, contrary to that conversion rate is typically used for specific campaigns. Your conversion rate narrates the importance and relevance of your landing pages. More conversions means positive ROI for your business.
Techsaga:Delivering Clients for more than 10 years
Through weekly communications, monthly reporting and strategy reviews we make sure every digital campaign is focused totally on delivering results aided by client-centric approach.
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