Right marketing strategy and its underlying initiatives (both traditional and digital) can deliver good results – provided they are associated with the right product or service; and if we are able to measure the ROI and make course corrections in a timely manner.
What is Marketing Initiative?
Anything that is essential to grow the business and generate profits is a marketing initiative.
- Offline Marketing:
Above the line promotion (ATL) has a wider reach and used for brand building eg. TV, Radio, News Paper.
Below the line promotion (BTL) is targeted marketing activity, gives better conversions and easy tracking of Return on Investment (ROI) eg. E-mail Marketing, In-house marketing for walk-in customers, Sponsorships, Forums, Events, Seminars, Billboard, Posters on Vehicles or any other outdoor advertising
- Digital Marketing:
Search Engine Optimization, Search Engine Marketing, Content Marketing, Blogs, Posts, e-Journals either ways free or paid ones.
- Through the line promotion (TTL):
Well-known as the complete package that targets the business needs using a 360-degree approach of marketing ie. Combining the strategies of ATL, BTL and TTL to maximize the ROI.
What is ROI in Marketing?
The ROI (Return on Investment) is simple, amount and efforts invested against the profits earned of course the duration matters. It straight away points to the growth of sales. The formula to calculate the ROI on Marketing Initiatives = Sales Growth – Marketing Costs. eg. If sales grew by 1 Cr and marketing cost is 10 Lacs then ROI is 1Cr /10 Lacs = 10%. ROI is as important as the business itself and digital marketing is providing tools to measure the success of each online marketing campaign.
Are you receiving the right ROI out of your marketing initiative?
The traditional or modern marketing methods, if they give you the expected returns then the ROI are acceptable for your organization. The success of online marketing initiatives can be analyzed using tools like Google Analytics but the offline marketing methods can be traced only at the conversion level and not prior to that.
Tools to check the ROI:
- Tracking the Marketing Channels for lead conversion.
- Promo Codes for specific promotion using a unique marketing channel.
- Website Listing and using unique URLs in the content shared by you.
- Google Analytics to monitor the page views, number of unique and repeat visitors, traffic via the website.
- Social Media Tracking tools like Google Alerts, Tweet deck, Hootsuite inform you when your business is mentioned somewhere especially in the social communities.
- CRM software enables you to track customer preferences, sales stages, and maintain customer relationships.
How to measure the ROI of Marketing Initiatives
The simplest way to measure the returns are in the money growing and are the profits increasing, are the expenses on marketing paying off in a specific percentage over a period.
The returns on certain marketing initiatives like SMS Marketing are quicker than the conversion from trade shows, also depending on the product. Measuring the ROI needs more than the formulas ie. the knowledge of when to measure the ROI, finding what influences the ROI, time for lead conversion, length of revenue cycle, investment per lead metrics, single attribution or attribute across programs (single event or multiple events conducted)
E.g. Marketing Initiatives are budgeted say 10,000 per month and the sales generated are worth 50,000 per month than in general can be considered profitable but business costs like brand building, brand awareness, reach penetration etc. attached to sales proportionately affect the ROI.
Are there any Industry benchmarks?
Marketing Budgets also vary by Industry and the trend of 2018 shows
|Industry Category||Marketing Budget /Revenue|
|Banking / Finance / Insurance||3.90%|
|Communication / Media||6.60%|
|Consumer Packaged Goods||11.00%|
|Mining / Construction||2.00%|
|Retail / Wholesale||3.80%|
ROI metrics are different from the leading metrics ie. ones that lead to an increase in profits eg. surveys, demos, etc.
ROI metrics include key performance indicators, lead generation, volume, and conversion in general and can change with the nature of business eg. If you are an online seller the ROI metrics will be sales value, volume, and revenues.
(Gain from Investment / Attribute – Cost of Marketing / Campaign Investment) Total Cost of the Investment on Marketing / Campaign
The costs of marketing and the budgets for same are lesser for the higher revenue bracket companies as the brands are established, they may spend 4-6% of their revenues against the new companies spending 12-20%. Generally, to get good ROI small businesses with less than $5 million revenues should allocate 7-8 percent of their revenues to marketing.
In 2018, B2C companies are likely to spend between 7.3 to 8.6% of their revenues for marketing while B2B companies may spend between 6.4 to 6.8%.
What is missing?
Find what is missing or obstructing you from drawing better ROI.
- Find out whether the target audience is correct, the e-mail has relevant content, the links mentioned really work and are there something called “Call for Action”. E.g. 1. Your e-mail campaign is a success in terms of reaching the inbox and being read and yet people are not clicking the say registration link, that’s what is missing. E.g. 2. If conversions have increased just to 50 per month and the growth is stagnant it seems growing at a slow pace but in reality, you may miss the seasonal or occasional opportunities if so for your product or service then this is what you are missing on.
- Your marketing initiatives may bring you varied results but those which bring none should be eliminated from the marketing strategy. E.g. In UK Promotion of limited-edition Dove body wash for female what went severely wrong is the packaging that had soap bottles that compared with women’s figures to largely shapeless. The ROI, in this case, is obviously negative; on top of it, the company had to deal with resolving the issues that rose with such representation.
- Finding unique ways of marketing is must and if they cost zero nothing like it. Eg. American Express is a great example of ROI as they spend none still are being talked about and searched a lot due to the marketing initiative. It invites guest authors from various sectors to share their business knowledge and insight, making Open Forum which is a collaborative website utterly content-rich and popular on the search engines. Online conversion is possible due to the value they create for the community.
While trying to find out what’s not working you also come across the reports on what’s working which indicates the diversion of funds and efforts in that direction.
What can you do to improve ROI?
Invest innovatively, create an impact and be the leader by finding the right position in marketing, “Sow where it can grow” and reduce the costs that snatch away the profits.
- Spend on marketing wisely
- Revisit your plans
- Track your ROI
- Divert the efforts and funds to productive initiatives
- Innovate planning and implementation
E.g. 1. Royal Bank of Canada achieved an 18% improvement in customer satisfaction after implementing a social customer care system which was integrated along with the traditional call center applications.
E.g. 2. Shashi Exports P. Ltd., Bangalore, India’s biggest garment export firm trained the workers for career enhancement. This nine-month program yielded 250% of the net return on the investment in training.
If the expected ROI of your business is 2.5 times the investment in marketing, you can surely work to achieve that.
Being deserving of better ROI is insufficient without commitment. Trace the pros and cons of your existing marketing initiatives and strategies to modify the method or target.