"Half the money I spend on advertising is wasted; the trouble is, I don't know which half."

—John Wanamaker

Measuring the return on investment of your marketing dollars is an age-old problem. Most businesses know, vaguely, which marketing activities likely bring in the most revenue. But when asked how they actually know which ones are bringing in the most revenue, they usually shrug.

Fortunately, it doesn't have to be that way. In fact, the increasing ubiquity of digital platforms have allowed us to measure almost every part in the customer journey, even efforts that happen in non-digital environments. You just have to know how.

We've worked with countless clients looking to not just be successful in marketing and branding their business, but understand their success, so they can better target their spend and efforts. The formula to achieve that goal consists of five simple steps.

1. Understand Your Business Goals

At its best, marketing is closely connected to the mission, needs, and goals of the larger business. It's about more than promoting a product; it's about building a brand, catching an audience's attention, and growing the business as a whole.

That's why the first step to determining marketing ROI is a close understanding of your business goals. Are you looking to grow? How fast, and in what market? Are you building towards a societal good? At the core of its founding, what is the organization trying to accomplish?

In other words, you're defining what success actually means for your business. From there, you can move on to your marketing goals.

2. Set Your Marketing Goals

It's time to get specific. Knowing your business goals, you can closely define exactly what you want — and need — your marketing campaigns to accomplish to drive towards your larger organizational vision. Marketing goals can take a wide range of directions:

• Increasing brand awareness, especially relevant for startups and entrepreneurs just entering a market.

• Improving competitive positioning, which requires both an understanding of where your brand stands in the eyes of your audience and where you can move it.

• Updating outdated brand perceptions to align your business with audience needs.

• High-volume sales to gain market share rapidly.

• Increasing retention and/or reducing churn to build a more loyal customer base.

These goals aren't mutually exclusive, either. More than one may be relevant to your business. Still, a hierarchical understanding of your core marketing goals help you understand which you should measure.

Looking for more depth? You might have heard of SMART goals, which anchor more general goals into a specific timeline and measuring stick. They're an important part of your larger marketing strategy.

3. Find Your Benchmarks

Putting your own goals in place still doesn't quite get you to success measurement. After all, even the supposedly great increases in reach, clicks, and conversions matter little if your competitors grow at a faster rate. That's why, once your marketing goals are in place, it pays to perform some research on industry benchmarks.

Some of that research is publicly available. It's easy, for instance, to find email marketing or Google Ad benchmarks, segmented by industry, according to thought leaders in their respective space. It's not always that simple, though.

Many of these metrics can be either too niche to appear publicly, or include too many qualitative components. In that case, short of commissioning your own custom research, the right marketing partner can go a long way (ahem - contact us for a complimentary consult if you need help in this area).

4. Set Up Your Tracking

With your success measurement strategy in place, it's time to get technical. Now that you know which metrics can help you determine whether your marketing efforts are successful, you need the tracking in place to gather and evaluate the right data.

This is where the right digital tools begin to play a major role. Get this step right, and you can even track digital actions resulting from your print materials.

Depending on the ad channels you're using, you'll likely need to install some tracking pixels on your website. For networks like Facebook and Google, they can help you determine exactly what actions audiences are taking after they arrive on your website. UTM codes are another valuable tool to segment your traffic according to channels, and follow that traffic through to conversion.

An in-depth exploration of ad tracking mechanism would take thousands of words. Again, working with a marketing partner who can take care of this step for you, or at least guide you through it, can go a long way. 

5. Evaluate Channel-Specific ROI

Let's say that your tracking is in place. Now, all that's left to do is build reporting mechanisms that allow you to track the ROI of your marketing efforts, as close to the actual sale as possible.

For ecommerce merchants, this step is relatively straightforward. Since all conversions happen on your website, you can set up goal values in Google Analytics that tell you exactly which channels, and which individual ads, have resulted in a specific sales value. You can then determine how many marketing dollars you spent to achieve that sales goal.

It's not always that straightforward, of course. Achieving brand awareness or improving positioning, for instance, doesn't have a defined dollar value. Here, regular audience research allows you to better understand the success of your efforts, especially when getting granular on individual channels you're using to achieve your marketing goals.

Marketing Success Evaluation, Done Right

There's no doubt about it: determining your marketing success is a complex undertaking. It takes time and effort, along with the right strategy behind it all. 

Fortunately, it's far from impossible. Set it up comprehensively, with a close connection between business and marketing goals, and you're halfway there. Now, you just need tracking and reporting mechanisms in place to continually evaluate your marketing ROI.

The good news is that you're never on your own. You just need a marketing partner who values the ROI of individual marketing efforts as much as we do. That's an important part of our business model, as our CEO Julie Guest explains in her new book The Client Stampede. Questions about how to get started? Contact us today.