The Importance of Marketing ROI and How to Measure Program Success

The amount of money and resources spent on marketing represents a significant portion of most companies’ annual operating budgets. To be certain that you’re getting the best return on investment (ROI), it’s necessary to measure marketing ROI in terms that allow you to evaluate where your marketing expenses are producing the best and most profitable results.

Marketing Expense Categories

These categories represent the most important areas to measure and evaluate when assessing marketing ROI.

  • Marketing type – Consider every area where you’ve conducted marketing, including advertising, public relations, print and online marketing, direct mail, email, and search engine marketing. Also include all expenses incurred for labor, consultants, printing, design, editorial work and other outside services.
  • Number of impressions – Know how many impressions are made by each marketing area. This will be the number of potential leads or customers who see your ads, receive your mailings, or are otherwise exposed to your marketing message. This can include the number of mailings sent, the expected number of attendees at a seminar, or the total expected readership of a publication containing your ad.
  • Expected response – Calculate the expected response rate, based either on industry standards or on past results. Be conservative when making this prediction.
  • Average lead to prospect ratio – This number indicates how many leads become prospects or are converted to qualified leads likely to make a purchase. This number will also help you determine the cost per acquisition for each prospect and customer.
  • Average close rate – This indicates the number of qualified leads or prospects who are converted to customers who have made a purchase. It could also include the number of proposals won, bids accepted, or other sales or contracts acquired.
  • Annual customer value – Calculate or estimate the annual value for each customer. This will be the average amount of sales per customer per year.
  • Annual cost – Determine how much it will cost each year to put each marketing area into practice.

Are you getting an adequate ROI on your marketing programs? What could you, your marketing department, and your sales team do to improve marketing ROI?

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