How to Calculate Marketing ROI


Understanding the return on any expenditure of time, money, or resource is the holy grail of any business. Investible resources are limited and must be spent wisely, so developing a metric to understand return on investment (ROI) is not only a productive task but a necessary one. In theory, the formula is a simple one: profit minus cost divided by cost will equal ROI. Though when this otherwise simple formula is applied to marketing, it somehow gets a bit lost in translation. With a purely cash-centric value of profit, marketers often miss the whole point of what they are actually trying to measure.

"60% of marketers cannot quantitatively prove the impact of their marketing campaigns"

According to a recent CMO survey, over 60% of marketers cannot quantitatively prove the impact of their marketing campaigns. Why? Because marketing ROI isn’t as simple as money spent vs customers gained. It’s actually rather complex; many marketing tactics actually exist agnostic of campaigns and often the impact of a marketing campaign outlasts the campaign itself. Simply put, whilst they are undeniably critical, most of today’s marketing tactics are notoriously difficult to measure- content marketing and search engine optimisation to name just two.

So, it could be time to step away from a cash-centric definition of profit and instead measure ROI with a focus on these three long-term values:

  1. Touch points

  2. Brand awareness

  3. Customer lifetime value

Touch Points

An age-old marketing wisdom states that it takes at least seven touches to convert a cold lead into a sale. Whilst this number might not be true for every single transaction, the general principle conveys an element of truth: there is not one single catalyst that causes a purchase, rather, a number of multiple touch points.

"It takes at least seven touches to convert a cold lead into a sale"

Being able to measure the cost of each touch point, whether in budget or personnel hours, will give further insight on the buying behaviour of your customers and the efficiency of your sales and marketing tactics.

Brand Awareness

Measuring brand awareness is much more than revenue generated. Brand awareness is indicated by recognition, interaction, and engagement with your brand, and is most accurately measured in terms of return site visits, increase in branded search terms, and PR impressions.

The key thing to consider when measuring brand awareness is time. Have you given your campaigns and tactics enough time to mature? SEO campaigns, sponsorships, and PR efforts can take at least 6 months before you will see any sign of value.

Customer Lifetime Value

The typical cycle of any business lead follows three key stages: first awareness and engagement, then conversion and purchase, and finally loyalty and advocacy. With that in mind, it becomes glaringly obvious that it is quicker and cheaper to sell to current customers than it is to acquire new ones. In fact, depending on what industry you’re in, gaining a new customer can be anywhere from five to twenty-five times more expensive than retaining an existing one.

"Awareness & engagement, conversion & purchase, then finally loyalty & advocacy"

The only way to directly measure customer lifetime value is to adopt a closed-loop marketing system: to understand a customer’s first click, last click, and everything in between that has led to that purchase. In its simplest form, closed-loop marketing relies on data and insights from a robust CRM system, and is the only way to directly attribute bottom line profit to any marketing campaign.

Understanding the customer lifetime value is central to so many decisions about how you allocate your marketing resources and provides real-time feedback about your business’ campaigns, offers, and lead generation.

Very much still the buzzword of the day, return on investment (ROI) is a concept that holds significant importance to any business and is a top priority in the consumer decision-making process. Whilst on the surface measuring the return of marketing campaigns appears complex, having an in-depth understanding of exactly what you want to measure is vital to getting it right.

eWavelength are proud to have worked with many of the world’s leading brands to consult, advise on, and create innovative and impactful marketing strategies that actively support business objectives and deliver a clear return on investment. To find out more about how we can help boost your brand and your sales please contact Charlotte Hope on charlotte.hope@ewavelength.com.

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