How To Increase Marketing ROI In 6 Steps (With Real Examples)
October 23, 2023
Monitoring and optimising your marketing campaigns to impact the bottom line positively is crucial. Measuring marketing ROI helps you discover what strategies and platforms work and what don't.
But getting ROI right is tricky.
This blog makes it easier for you to understand the concept of marketing ROI, calculate it using different techniques and tools, set up a game plan to increase ROI and avoid critical mistakes along the way.
First up, what is marketing ROI?
Marketing ROI, or return on investment, measures the profit or loss you make as a result of your marketing activities. It calculates your earnings on each penny spent on marketing.
A positive marketing ROI means you make more revenue than you spend. Similarly, a negative ROI means you make less money than you spend on marketing.
As a business or marketer, your goal is always to create positive ROI from your campaigns.
Measuring marketing ROI is essential. Here’s why.
Tracking your ROI is essential for business growth. Here are 9 reasons why:
- Measuring marketing campaign ROI lets you know whether a specific campaign is making you money.
- You can identify winning marketing strategies that bring the best results and positively impact the bottom line.
- Your marketing team can figure out which marketing channels work best. It gives you the information to build effective marketing mix combinations.
- You can then optimise digital marketing strategy and campaigns to improve performance.
- Measuring ROI helps you discover where the leaks (areas that drain leads) in your sales funnel lie. Once you know the problem, you can introduce meaningful changes in marketing processes.
- The insights from marketing ROI can be used to refresh your ICP continually. These changes are based on audiences that respond positively to your campaigns.
- Alongside sales, you can develop retention strategies to engage with customers and generate long-term revenue.
- At the leadership level, ROI from a marketing campaign helps justify your budget and resource allocation for future campaigns.
- Finally, you can track your competitors' ROI (through public information and financial statements) and compare your performance. These insights show where you can improve and maintain a competitive edge.
Getting a better look at your current marketing ROI
There are multiple techniques for calculating ROI from marketing tactics. We've listed the most widely used methods below. There are also several tools available to make the calculation easier.
Depending on the size and marketing strategy, you may opt for a technique or tool that works best for your organisation. You can always explore all of these before finding the right one.
A. Methods of calculating ROI from marketing campaign
1. Simple ROI
As the name suggests, the formula for calculating ROI using this method is straightforward.
For example, if you invest £1,000 into marketing and earn £1,500 as a result of these campaigns, your ROI will be [(1500-1000)/1000]*100 = 50%
Marketing investment or costs typically include overheads, agency fees, fees for media buys and creative development, among others.
2. Cost ratio
Under the cost ratio method, ROI is calculated as below.
A generally accepted cost ratio of digital marketing ROI is 5:1. For every dollar you spend, you'll receive $5 in revenue.
3. Direct & indirect revenue attribution
'Direct' attribution considers all revenue attributed to a single marketing touchpoint. For instance, the final point of sale is often considered for calculating ROI.
However, the' indirect' method is a more accurate and holistic way of attributing revenue. In this technique, revenue is attributed evenly across all marketing touchpoints.
4. Other methods
As we mentioned earlier, ROI from marketing efforts can be measured in multiple ways. It doesn't always need to consider costs and revenue because sometimes the campaign objectives differ.
Other ways for calculating ROI can be via:
- Leads generated
- Leads converted
- Cost per lead (CPL)
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Landing page views
- Social media followers gained
- Social media engagement, and more.
B. Tools you can use to calculate marketing ROI
Here's an exhaustive list of tools we've put together based on their usefulness for calculating ROI from your marketing campaign.
Calculator.net is an easy-to-use and easy-to-understand tool. And it’s free!
HubSpot provides an ads calculator specifically to calculate ROI from social media ads. The tool is free to use.
Salesforce's marketing cloud overview lets you calculate ROI by analysing the customer journey and buyer interests or preferences.
4. Google Analytics
Google Analytics works across web and app platforms. It can track each campaign, making it easier to calculate ROI. Google provides the tool for free.
5. Baremetrics or Qualtrics
Driftrock helps calculate your ROI from lead generation and management by tracking your customer from lead to sale and beyond.
Mailchimp can be used specifically for calculating email marketing ROI.
8. Power BI by Microsoft
Power BI is a more advanced tool for real-time insights and data visualisation.
Now that you have the tools and techniques, to begin with, let's see how you can improve marketing ROI.
How to increase marketing ROI: The game plan you need
You may be new to calculating marketing ROI. Or, you may already be on your growth path and tracking ROI every step of the way. Irrespective of your current situation, the goal is constantly improving ROI to increase your revenue.
Here are 6 best practices you can follow:
- Set clear objectives
- Target the right audience
- Optimise marketing channels
- Consistently improve ad creatives and content
- Deploy marketing automation tools
- Undertake continuous testing
1. Set clear objectives
As we mentioned, ROI can be expressed in terms that aren't monetary. If you aim to build brand awareness, you may be chasing social media followers as an objective.
To determine your ROI on a specific campaign, the first thing you must do is list down clear objectives. The results will be directly related to these goals.
You can use any of these three methods to set your objectives:
a. Objectives and Key Results (OKRs)
As the name suggests, list your objectives and the primary results when those objectives are fulfilled.
For example, your objective could be – increase revenue by 10%. The corresponding key results could be – increased conversion and reduced churn.
b. Key Performance Indicators (KPIs)
KPIs are measures of marketing performance. Some KPIs you could use are –
- Monthly conversion rate
- Improved search engine ranking
- Increase in social media engagement
c. SMART goals
SMART goals include specific, measurable, attainable, relevant and time-based goals. Find out how to use the goal-setting method correctly in this article by Forbes.
2.Target the right audience
Campaigns that reach the right audience have better outcomes. But how do you identify which are the most profitable segments?
First, compare analytics across multiple digital platforms (you could also use tools to do this) to find the best-performing audience segments. These audiences will be the ones interacting with your content the most. Compare these segments against your campaign objectives and overall business goals.
Next, check with your teams for firsthand feedback on these segments. You can collect this information through surveys, feedback forms, focus groups or virtual messages like Slack. Similarly, feedback from customers can give you priceless insights. Gather data from them via website feedback forms, surveys, newsletter requests, live chat or social listening.
After analysing the data, you'll find that the most profitable segments are the ones having:
- High customer lifetime value and retention rate
- Low churn and decreasing CAC
Once you've identified these segments, tailor your marketing campaigns to suit their preferences and behaviour.
3. Optimise marketing channels
To optimise your campaigns, analyse the effectiveness of all your marketing channels and focus on the most productive ones.
You may start by exploring different campaign channels to amplify your campaign on new channels. For instance, you're launching a new car model. This could be your plan of action:
- A video of the new car goes up on YouTube first and then on other social media platforms.
- The video could also be played in dealership stores.
- Press releases in prominent publications with quotes from key leaders.
- Invitations to car reviewers (relevant to your audience) to share their opinions and spread a positive word about the car.
- OOH hoardings at high footfall locations.
To find out which of these channels are most effective, you can use these methods:
a. Reach, Cost, Quality (RCQ)
In the RCQ method, you assess the best marketing channels based on:
- Reach – How many customers see your post or ad
- Cost – The cost of each touch on respective mediums for the post
- Quality – How many targeted engagements do you receive on the post
b. Marketing Mix Modelling (MMM)
The MMM approach breaks down campaign results according to each channel. It lets you check which marketing channels and activities impact consumer behaviour, revenue and sales most.
MMM uses data on sales, marketing spend, market, consumer, product, economic indicators and competitors. Since it uses various factors (internal and external), it gives you a better idea of the proper marketing channels.
Check out Gartner’s guide to MMM for a deep dive into this method.
c. Multi Touch Attribution (MTA)
MTA assesses the number of contacts a buyer makes before completing or dropping a purchase with your business. It shows which channels have the maximum impact and conversion, driving maximum value.
Once you find out your most productive channels, you have a better picture of how to distribute the marketing budget to get the desired ROI (or even surpass it). Refer to this comprehensive MTA guide by Search Engine Journal to develop the right model for your business.
Out of the three mentioned here, MMM and MTA are complex methods that are best built in partnership with a marketing consultant or strategist.
4. Consistently improve ad creatives and content
Easy-to-understand content and eye-catching visuals get you more engagement. Here's what you can do to make your creatives and content interesting enough that customers interact with it.
a. Quality and relevance
'Quality' content is well-researched, well-written and well-optimised. This content is 'relevant' to your audience when it matches search intent and needs and provides valuable solutions or answers to their problems.
b. Content refresh
Refresh old content to extend the post's lifespan. You can add new information, data, statistics or examples to outdated content.
A content refresh improves your online visibility, reaching a wider audience and ensures that you keep content evergreen (always relevant).
c. Easy navigation
Make navigating through your content easier by:
- Using attractive images or designs. It also applies to video thumbnails; instead of using a still from the video, create thumbnails with high-resolution images.
- Writing headlines that grab attention.
- Optimising content for all devices, particularly for mobile.
- Including a table of contents for long-form blogs or articles and internal links to resources.
- Using emojis and special characters to convey the right emotions and make it enjoyable to look at.
- Including a clear CTA telling the audience what to do next. For instance, get this exclusive 'resource', see the link in bio or buy now.
Explore multiple content formats to keep things fresh for the audience. You can choose from videos (short or long), images, carousels, stories, website widgets, lead generation forms, surveys and more.
You can also gamify your content with quizzes, puzzles and Q&As.
The key to experimenting is playing to each platform's strengths, specifically when it comes to social media. You can use Hootsuite's guide to better know your social media platforms and content.
Lastly, you can improve your content and creatives if you know what is wrong with your assets.
Analyse past campaign performance, find out what your audience likes about that campaign and incorporate your learnings into future campaigns.
5. Deploy marketing automation tools
Marketing automation improves efficiency and returns as much as $5.44 for every dollar you spend (Source: Nucleus Research)
CMOs who utilise 70% of their martech stack’s capabilities achieve 20% better marketing ROI than peers (Source: Gartner)
Marketing automation tools can unify your revenue teams—sales, marketing and customer success–across the sales funnel. All teams should have access to integrated data.
This integration helps teams develop more accurate targeting, better personalisation, optimised cross-channel references and real-time A/B testing.
Automation makes extracting insights and reporting simpler. With these insights and reports, you can analyse relevant metrics like:
- Peak engagement times
- Customer channel preferences, and
- Historical buying behaviour.
Plus, you can track potential customers throughout the buying journey without manual interference. Accurate tracking gives you the momentum to retarget leads, encourage purchases and improve conversion rates.
Other than the above key activities, marketing automation also does the following:
- Automates email marketing schedules
- Social media posting schedules
- Audience targeting and segmentation
- Data management and integration
When automation takes over repetitive tasks, your teams have more time to strategise and concentrate on their core functions.
6. Undertake continuous testing
Regularly monitoring and adjusting your campaign sets you up for more optimal results. It's important to test campaigns before they go live. But don't leave out the ones that are already up and running.
Use A/B testing to refine your performance. Start by editing one element of the campaign and then comparing its performance to the preceding duration. You can make multiple variations to find the combination that performs the best.
You can test the copy, visuals, CTAs, links, headlines and offers.
Use these tests' learnings to determine what your audience responds to and what makes them convert.
Finally, you can improve your performance by:
- Personalising your campaign message
- Making it more relevant for the audience
- Improving the quality of elements
- Addressing customer pain points
- Understanding customer perception and
- Making changes faster
These best practices will give a much-needed boost to your marketing ROI. And if you're looking for more tips and inspiration, keep reading!
How to increase marketing ROI: Get inspired by these success stories
Check out three real-world success stories where Driftrock helped brands improve their marketing ROI.
1. The Car Expert
The Car Expert used Driftrock lead capture forms to convert more website visitors to leads.
What worked: Visitors experienced a frictionless journey where they didn't have to leave the page to share their details. Lower friction equals more signups and registrations.
Results: Increased website lead conversion by 400%.
2. Clever Investor
Clever Investor used Driftrock's capabilities to show relevant ads to their target audience and existing customers.
What worked: The ad campaigns were personalised for the stage at which the leads or customers were. The quality and relevance of the ads won audiences over.
Results: Increased the return on ad spend (ROAS) by 53%.
Boomf wanted to improve customer loyalty through repeat sales on their website.
What worked: Boomf used automation technology to sync their CRM segments with Facebook dynamically. By targeting their past but valuable customers, the brand increased its recall value to drive more sales.
Results: An 89% decrease in cost per conversion and a 9x increase in ROAS.
You know what you can do right. But it's just as wise to know what mistakes you can avoid to improve your marketing ROI.
Steer clear of these mistakes to improve marketing ROI
Here are five mistakes to look out for.
Mistakes To Avoid For Improving Marketing ROI
✖ Using simplistic measurements
✖ Not calculating the true costs
✖ Relying only on self-attribution
✖ Measuring too early
✖ Falling for budget constraints
Using simplistic measurements
ROI calculation includes multiple factors. Instead of only considering internal factors, look for external ones like seasonal trends and events.
Plus, a single campaign may use different marketing channels. With so many touchpoints, you can't focus on a single one for granular insights.
Not calculating the true costs
The true cost of marketing campaigns involves both direct and indirect costs.
Direct costs include hiring writers, content creators, graphic designers, paid ad specialists, content purchase and the like. Whereas indirect costs—time spent to edit, manage and distribute content—are easy to miss.
Relying only on self-attribution
Self-attribution is when customers report their touchpoints themselves. But most times, they only consider one. On the other hand, the buyer journey is non-linear and has multiple touchpoints.
Measuring too early
B2B sales cycles were lengthier by 32% in 2022 as compared to 2021.
B2C cycles, on the other hand, are unpredictable owing to a wider range of products. For instance, buying a car may take several months while purchasing a t-shirt could take as little time as a few minutes.
Moreover, you may be using multiple channels for a single campaign. Assimilating metrics from all these channels could take time.
As a result, some ROI metrics may take several months (and sometimes even years) to build. Trying to prove your marketing ROI within the first few weeks or the first month will yield ineffective results.
Falling for budget constraints
Rather than falling for budget constraints and cutting down on marketing spend, prioritise customer retention.
You can optimise ad budgets using free or low-cost tools with similar features. Leverage channels which contribute most to your ROI objectives.
To determine which platforms you can prioritise, use the impact-effort matrix below.
Summing it up
Now you know everything about why marketing ROI is essential for revenue growth and how to improve it. You can use this checklist to get a leg up in the marketing ROI game:
Driftrock's lead generation and management capabilities are designed to increase ROI from your marketing campaigns. Check out our features and tools by booking a demo!
Additional resources to dive deeper into marketing ROI
Check out these resources to learn more about marketing ROI and improve it.
- HubSpot: 2023 Marketing Strategy & Trends Report
- A whitepaper by GFK: How to maximise marketing ROI in an uncertain world
- Shopify: 11 low-cost and free ways to promote your business
- Driftrock: 7 strategies for maximising ROI if you're a tech company
- An infographic by McKinsey: How top marketers tackle spend efficiency
- A comprehensive guide by Marketing Insider Group: Driving ROI from Content Marketing
- Webinar by The Marketing Centre: The CEO's guide to measuring marketing ROI