Why Marketing ROI is so important

Marketing ROI

The challenge for every Marketer is how you can track the "return on investment"(ROI) for all of your marketing channels.

Let's discuss this metric and the best ways to leverage it.

What is it?

Marketing ROI (MROI) is a metric that your business can use to measure the effectiveness of your Marketing Campaigns. The metric measures the revenue generated by your marketing activities from all of your channels (including email marketing, social media etc) relative to the marketing costs spent.

How is it calculated?

?MROI = (Profit - Marketing Cost)/Marketing Cost x 100

Example - if Sales grew by $100,000 and the Marketing Campaign cost $10,000, then the ROI is 1000%.

Why it is so important?

Measuring MROI provides you with crucial insights into which marketing campaigns are performing the best and also provides your business the following benefits;

• Improved Decision-making - if you calculate ROI for each campaign, this will better help you to understand where to invest further
• Overall marketing performance - if your ROI metric improves, this is a good indicator that your marketing efforts are effective
• Understanding your spend - through measuring your sales profit vs the related marketing spend, you can better understand your bussiness's overall performance

Example

You can use your CRM to track the individual costs per lead and your return on investment for different marketing campaigns. In the example below, as each Web lead is created in the CRM a cost is calculated for each lead based on the profit vs marketing spend.

Let's consider a real-life example;

• Let's say you have invested a large sum in a Real Estate Portal Marketing Campaign and you are happy with the quality of the leads coming through
• Then you also decided to run a Social Media lead campaign (e.g. Facebook) and received about x 10 times the number of leads at the at the same overall cost. So effectively the cost per lead was a 10th of the Real Estate Portal marketing campaign.
• However the quality of the social media leads were not as good at the Real Estate Portal leads. And they were most likely x 5 times more likely to close one of these leads over a Facebook lead. So the cost per buyer is actually lower than Facebook.
• On the other hand, there is the added benefit of the large volume of leads created in the CRM from Facebook, meaning that Agents had a lot more leads that they could nuture for future sales.

Conclusion

Overall Marketing Return on Investment is a crucial metric, as it provides valuable insights into your company's performance and can help you to make more informed business decisions.

If you would like more information about the Campaign ROI feature, get in touch with RoundRock Systems.