Digital marketing is continuously on the rise, and so are customers’ expectations of personalized digital interactions aimed at their specific needs. To meet those expectations, 98% of CMOs now merge their traditional and digital marketing efforts, including key technology investments in the areas of social marketing and digital commerce.
Regardless of the digital technologies used, generating revenue remains a primary focus for any business. Common sense then dictates that marketers need straightforward ways of determining if their efforts are generating revenue.
Enter return-on-investment (ROI), an essential metric for any organization looking to assess the impact of its digital marketing activities. As a metric, ROI is simple; it is the cost of carrying out an activity versus the resulting outcomes. While the theory of ROI is straightforward, measuring it – and knowing how to grow it – pose an altogether different challenge. In this blog, we’ll explore some important ways marketers can boost ROI from their digital marketing efforts.
Know the Value of Data
Understanding the value of the data you collect is the foundation to figuring out how to use it for analysis and planning. However, many organizations underutilize analytics with regards to digital marketing. According to research by Forbes, only half of marketers regularly practice data-driven marketing to individualize marketing messages and offers while just 39% of organizations capture the business benefits realized from taking action based on customer data. When it comes to company executives, only 3% view proving the effectiveness of marketing to be a top priority.
These are sobering statistics to consider given the volume of data generated in a single minute and are counterintuitive to the finding that individualized marketing is a priority for 92% of executives as determined in the same research. In addition, the majority of marketers today (87%) consider data the most underutilized asset in marketing organizations compared to 46% in 2013.
So the question is, how do we reconcile the desire for individualized marketing with the need to collect the right data, analyze it for business benefits, and measure its effectiveness in the pursuit of better ROI?
Be a Marketing-Driven Organization
It’s no secret that today’s digital technologies enable marketers to explore customer data in greater detail than ever before – not only for prospecting but for ongoing customer engagement.
That’s why forward-thinking executives across the enterprise support data-driven processes that emphasize marketing principles throughout the sales pipeline. Unlike the outdated view of marketing is a luxury add-on, these efforts will facilitate the growth of personalized interactions that many view as a hallmark of tomorrow’s marketing-driven companies.
Establish ROI Goals
When establishing a business goal, it helps to keep the acronym “SMART” in mind, a reminder to make sure the goal is Specific, Measurable, Achievable, Relevant, and Time-bound. Setting an ROI goal is no different, yet it can be difficult to determine. In general, a good marketing ROI is 5:1, meaning $5 in sales for every $1 spent. A ratio of more than 5:1 is considered strong in most industries, and 10:1 is exceptionally high. Achieving a ratio higher than 10:1 is possible but rarely anticipated.
Remember, your target ratio depends on many factors, including your industry, cost structure, and other variables. It is best for organizations to aim for success without setting unrealistic expectations and ensure the analytics chosen focus on the impact of your company’s marketing efforts on achieving or exceeding the target ratio.
Beware of Overvalued (or Undervalued) Metrics
Some metrics tend to be overvalued, particularly when it comes to social networks. While it is easy to measure ‘likes’ and ‘shares’ on Facebook, they have no direct impact on revenue.
However, it is also a mistake to discount them entirely as likes, shares, and comments can improve your brand’s standing in Google and other search engines and result in more users finding your site. This is particularly true for nascent content teams, who must often rely on non-traditional metrics to determine what factors contribute to their success.
Identify and Seize Opportunities
Once numbers are crunched and tools are in place, recognizing and acting on opportunities is key. A case in point is Kraft Foods, which set out to reinvent its marketing strategy after splitting from Mondelēz International in 2013.
According to Bob Rupczynski, Vice President of media, data, and CRM: “We knew back then that data was going to be the backbone of how we were going to move forward … We had a tremendous amount of data, but yet we weren’t leveraging the information that consumers had entrusted to us to make the relationship deeper.”
By leveraging more than 34,000 attributes across 100 million online visitors each year, Kraft identified more than 800 consumer marketing segments to use as a guide when purchasing ads. The returns proved to be amazing not only in sales, but also in click-through rates, interaction rates, and search behavior.
Use Predictive Modeling
Predictive modelling is an important tool for both measuring and increasing ROI. Once used only to project conversions or sales prior to launching a marketing campaign, these analytical tools enable marketers to use internal, website, and social data to interpret specific and contextual information about individuals and companies. This enables the development of appropriate marketing activities based on these insights.
Add Marketing Automation
As digital channels multiply and data gets more unwieldy, CMOs increasingly look to marketing automation tools to stretch their marketing budgets. With a predicted market worth $5.5 billion by 2019, these tools can boost ROI by enabling marketing teams to use every dollar wisely. By performing repetitive tasks, managing email lists, housing documents and images, and performing a wide variety of functions, marketing automation helps organizations carry out complex marketing campaigns even with limited resources.
Experiment and Make Adjustments
As with all marketing activities, ongoing measurements are important to determine what is effective and when changes are needed. Did the revenue jump following the last marketing campaign, or did it remain stagnant? What other factors might be at play? Are there unique website visitors, qualified leads, or other important data points following the latest promotion? All these factors play a huge role in the success of campaigns and ultimately ROI.
For Lenovo experienced similar success by harnessing data as they recognized the need to leverage the volumes of data collected on a daily basis. To that end, the company formed an analytics team in the e-commerce unit to analyze marketing data from more than 60 sources worldwide.
By analyzing the perceived quality of online interactions, Lenovo was able to meet promised shipment dates and leverage feedback about products through direct contact and social media. This way the organization can identify where customers find value.
An example of this was evolving to offer Lenovo’s tablet using a Microsoft operating system in addition to its Android version. By identifying the customer’s desire for a Microsoft version, Lenovo was well placed to act on the data and reap the rewards of a version they may not have considered otherwise.
In conclusion, by using analytics to interpret data and monitor trends, your organization can unlock opportunities, remove obstacles, and attract positive attention to your brand. As knowledge is leveraged, marketing strategies can be developed that engage and excite users, attract and retain customers, and accelerate marketing ROI.
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