Introduction
When it comes to boosting returns on investment, companies need the right marketing strategy. Too often, brands end up trying to improve ROI with ineffective practices, leaving them out of pocket with faltering returns, desperately trying to figure out what went wrong.
This time spent understanding why ROI isn’t improving leaves brands falling behind in the marketplace and losing track of what’s important: meeting customer needs and expectations.
That’s why in our latest article, we’ll be looking at five ways to increase your returns on investment, helping you deliver results that will put you a step ahead of the competition.
What is the return on marketing investment?
Return on marketing investment, or marketing ROI, measures the effectiveness of your marketing activities. To calculate this metric for your marketing campaigns, you’ll need to divide the net profit by the total investment cost and multiply the result by 100 to express the number in percentages.
By comparing the ROI of different marketing tactics, you’ll know which strategy is the most profitable, helping you make cost-effective decisions to boost your business’ growth in future campaigns.
Finding a good ROI range for your business
Most marketers will use ROI statistics from their industry to benchmark their own ROI goals. They may also use the ‘golden rule-of-thumb’ ratio of 5 to 1, which means every 5$ of profit will cost 1$ of investment.
But here’s the truth: there is no benchmark or golden ratio.
All companies have different business objectives, with alternative capacities to pursue their goals, so a ‘catch-all’ ROI really isn’t applicable.
In other words, you need to identify an ROI specific to your business. Then align your business capacity with your marketing objectives, as this will allow you to use resources more effectively and achieve your long-term goals faster.
5 ways to improve your ROI
Be SMART when setting your ROI Goals
At the start of every marketing campaign, there should always be a goal. Whether you have one or several goals, ask yourself: Are they SMART?
SMART is an acronym for five criteria that guide your goal-setting. A goal is SMART if it’s:
- Specific: Your goal should be as clear and detailed as possible to avoid losing focus.
- Measurable: A quantifiable goal motivates you to stay focused, especially when you’re close to achieving that goal.
- Attainable: While it’s good to have a goal that pushes you, be careful not to make it impossible to achieve -you’ll be burned out before you know it.
- Relevant: Avoid goals that aren’t connected directly to your overall business objectives; otherwise, you’ll waste time and valuable resources.
- Time-bound: There should be a timeline for your goals to help you stay organized and on-track.
A clear, concise, well-defined objective provides a sense of direction that helps you allocate your resources more efficiently. With SMART goals, your colleagues will also be able to work at their best, knowing that the team’s goals are within reach.
Focus on your relevant metrics
Choosing the right metrics is crucial to improving your ROI. But most marketers end up wasting their resources tracking vanity metrics. These are performance statistics that look impressive on paper, but in reality, provide little actionable insights into your business. These metrics often lack context to the business problem and don’t help you make decisions.
So, make sure that your metrics are relevant to your business goals, as this will allow you to stay on track to achieve your KPIs and drive your returns.
Create a customer-first strategy
One way to boost your marketing ROI is to introduce a customer-first strategy. This marketing approach puts customers at its core, aiming to create a positive brand experience by understanding customers and meeting their growing needs.
Being customer-driven allows you to deliver the right messages to the right people on the right channels. As a result, you’ll create more meaningful relationships with customers and, ultimately, establish greater loyalty.
At the core of a customer-first strategy is data. By collecting data about your customers’ needs, preferences and behavioral patterns, you’ll be able to create personalized marketing campaigns. This will help you develop ever stronger connections with your customers.
With this strategy, you’ll also need to pull data about your customers across multiple touchpoints to understand their journey. From there, you’ll be able to see any customer challenges, amending and changing to provide the best shopping experience while discovering potential market opportunities.
While collecting, managing, and analyzing a big chunk of data is often overwhelming, there are advanced technologies to ease the process, like customer data platforms (CDPs). This tech can dynamically segment different customer groups based on a range of attributes, helping to deliver the most customized brand experiences across multiple channels.
Take advantage of marketing automation technology
Right now, 86% of marketers are increasing their lead conversion thanks to marketing automation. By streamlining manual tasks, you’re freeing up more time for your colleagues to work on the overall strategy, as well as nurturing leads that are truly potential.
In addition to improving work efficiency, marketing automation pinpoints the stages customers are at in their purchasing lifecycle. As a result, you’ll be able to create customized messages that will get them to the final step of clicking buy now.
Test and experiment frequently
Testing marketing strategies frequently helps you learn the best approaches for maximum marketing performance. Through testing, you’ll learn the right channels, ad formats, and messaging types that work best for your target audience. This will eventually improve your conversion rates and drive a higher ROI.
Our final thoughts
The first steps to boosting your marketing ROI are critical. By setting SMART goals and choosing relevant metrics, you’ll use resources more effectively. Pair this with a customer-first strategy and marketing automation, and you’ll be on your way to increasing your ROI and accelerating your business growth in no time.
