Do Your Tracking Methods Align with your Marketing Goals?

The ultimate goal of marketing is to have a positive return on your marketing investment or ROMI. It's not enough to merely track gross sales and the amount of money directly invested in an ad, content created, or outsourcing to marketing agencies. Vanity metrics, like web traffic and page views, give only surface information.

As a marketer, what does that mean you should track? To align tracking methods with overall ROMI, marketers must include the right variables in their calculations. 

Customer Lifetime Value

To understand your marketing investment’s full return, it's important to understand your customers' lifetime value. A customer's lifetime value is their value to your business throughout all the purchases that a particular customer makes from your store. An assessment of lifetime value can make a big difference in your view of a customer's overall value to your business.

It can take months to make a sale or to bring customers back for future purchases. Depending on the products and services you offer, the sales cycle can vary dramatically in length. For example, a customer looking for a high-dollar purchase may spend much longer in the sales funnel or return only rarely for future services. On the other hand, in some cases, customers may move through the sales cycle relatively quickly. These customers may make future purchases much more readily than their initial investments with your business.

If you're only measuring your gross sales, then the ROMI calculation will undervalue how much your marketing has helped your company grow. Instead of getting a full picture of exactly what your marketing efforts have accomplished, you will be left with only the immediate increase in your sales. This can leave you feeling as though your campaign fell flat. Instead, track customers to see how long it takes them to make the first purchase. Evaluate how many customers become repeat purchasers. With this strategy, you can develop a much better idea of each customer’s full value to your company. This, in turn, will tell you how much you actually receive in return for your marketing investments. 

Organic Growth

In order to understand what your marketing efforts are accomplishing, your business needs a model of organic growth. This model then gets compared to your business's actual growth as a result of your marketing campaign. Not all sales can be attributed to marketing. Some are the natural result of the business growing. Your business will grow organically over time; customers will come back to your business for their future needs and will recommend you to friends and family. Some customers will even naturally wander in off the street to take a look at your business.

Your marketing efforts, on the other hand, can help your business grow further and faster. To assess your marketing’s effectiveness, however, you need to know which tactics are helping to grow your business.

Start by establishing a baseline for how sales would increase if no marketing efforts had been put forward. Make sure you have a solid idea of how much your business naturally grows over time. Then, track your organic growth to ensure that your ROMI is not overvalued. 

Brand Equity

Brands that are top of mind are more likely to be purchased. Customers are simply more likely to turn to a brand that they recognize. Consider, for example, branded queries. Branded queries are a direct search for your website and brand, not just for something in your industry. An increase in unaided awareness helps generate an immediate increase in your sales. It also aids your gross sales substantially in the future.

Marketing investments in brand awareness, brand building, and rebranding will not have immediate or easy-to-measure returns. It's hard to track these elements directly. You may not see immediate visits to your website or purchases directly from a specific ad.

You may often find that increasing your brand equity ultimately has a greater return on your overall investment than any single marketing campaign. The problem is, it can prove more difficult to measure its effectiveness. One strategy? Try using surveys to help measure unaided brand awareness and get a better idea of what percentage of consumers are likely to recognize your brand. 

Labor Costs

In tracking your ROMI, you must understand everything you spend on your marketing efforts. Make sure you include the opportunity cost of not having those man-hours spent on other revenue-generating tasks. If your employees are creating your marketing materials, they are not spending those hours elsewhere. Your marketing investment is not just the money spent directly on advertisements or branding. You must also include the man-hours spent on marketing. Multiply those hours by the wages of those employees involved in the task. 

When ROMI is properly measured, the company is usually incentivized to use its time wisely, invest in branding, and appeal to existing customers. It also gives you a better idea of what your marketing dollars are actually accomplishing. However, when you measure incorrectly, then what appears to be a positive ROI may be negative--and vice versa.

Outsourcing to experts can eliminate the opportunity cost of marketing in-house while increasing the easier to measure factors, including gross sales. For many businesses, this means both a better understanding of the return they experience for their investments and a better overall ROMI. 

2020 Isn't Over Yet Webinar

Related Posts

Marketing ROI

How to Align Your Marketing Plan with 2020 Surprises

2020 has been filled with surprises and shifts in what your business needs to provide, both to your community and your customers. You have faced new rules that you must adhere...

Marketing ROI

Perfect Pairings: The Best Marketing Channels to Use for Different Marketing Goals

Maximizing marketing campaigns is the goal of any business or company. However, what makes this process so complicated is the number of marketing channels out there that can...