A Complete Guide to Measuring the Effectiveness of Marketing Campaigns
Most marketers will tell you that ROI is the most important measure to use when evaluating the success of your marketing efforts.
However, return on investment (ROI) is not a perfect measure of success. The efficacy of a campaign and the decision to increase investment can be gauged by looking at the rate of change in ROI by return on marginal investment (ROMI).
The Challenges of Measuring ROI
Many marketers use attribution models to measure ROI success, but the thing is, attribution models are subjective, and they rely on opinion.
What Are Attribution Models?
Attribution models are a set of rules that determine credit for which sales touchpoint resulted in a conversion.
For example, the first interaction attribution model gives credit to the first interaction a customer had with your brand. Some brands’ subjective opinion would be that this is the measure of their success and therefore will focus efforts on whatever that first touchpoint is.
Another way to measure is the linear attribution model, which gives an equal amount of credit for a user's conversion to each of the touchpoints that led up to it.
The last interaction model gives 100% credit to the last touchpoint before purchase.
Attributing Leads to Revenue
Unfortunately, not all leads end up becoming paying customers. Specialized marketing tools are needed to follow the buyers’ journey progress from being a lead to becoming a customer, a process that may take months or even years.
Attribution in a Cookie-less World
Now that Google is removing third-party cookies, certain marketing efforts will be harder to measure. Strategy, readiness, and infrastructure are the three most important variables in this cookie-free world.
Customer Lifetime Value Isn't Constant
This metric estimates what a business can expect in revenue over the duration of a buyer’s relationship with a brand. Customer lifetime value (CLV) can be difficult to measure because it’s predictive and based on historical behavior, making it tricky to base revenue off something relatively unknown.
Incorporating Brand Building
Raising brand recognition may indeed boost revenue, but it isn't easy to pin the success of a marketing effort squarely on the campaign's performance in generating real sales. Typical measurements used to gauge improvements in brand recognition are frequently referred to as "vanity metrics.” Vanity metrics make your brand look good, but they are difficult to attribute exact revenue to.
Differentiating KPIs From Vanity Metrics
KPIs, or key performance indicators, refer to a metric critical to determining whether or not a company is on track to achieve its objectives. Vanity metrics are figures that seem impressive but don't tell you anything useful about how to improve your company.
Different marketing KPIs can be prioritized when assessing return on investment depending on the channels used and the campaign's objectives.
Some metrics like customer acquisition cost and customer lifetime value are always important.
Metrics that are helpful for email marketing campaigns aimed at customer acquisition are:
- Open rates
- Click through rate
- Rate of conversion
Metrics for a content marketing strategy aimed at generating leads include:
- Organic traffic
- Form fills
- Sales-ready prospects
- Cost per lead
Measuring Success with ROMI
ROI is a crucial statistic for business leaders, but return on marginal investment is a valuable metric to consider when evaluating a campaign's success and enhancing marketing performance.
The Right Marketing Metrics for Success
For marketing campaigns that are focused on success, get in touch with Midwest Family Southwest Michigan for a no-cost marketing strategy consultation for assistance in developing a winning plan that will achieve results.