With the evolution of markets, it has been seen that companies came up with several business models to survive in the market and achieve an upper edge in the competition but one thing that never changed is the foundational metric – return on investment (ROI). Every business, irrespective of being offline or online invests both its qualitative and quantitative resources to yield returns in the form of achievements of its business objectives and ultimate goals. In the fast-paced digital landscape, measuring ROI is paramount for the success of any marketing strategy. The incredible expansion of digital marketing among businesses made them heavily rely on digital marketing initiatives, which makes ROI a crucial metric to measure the performance of implemented strategies. Read this blog to delve into the top three robust strategies to accurately gauge ROI in your digital marketing to gather accurate data on the results of your initiatives.
Conversion Tracking - Unleash the power of data to evaluate ROI
In the realm of digital marketing, where billions and trillions of campaigns are being created and run over the internet, conversion tracking is considered a bedrock strategy for evaluating the success of campaigns. Conversion tracking strategy involves monitoring user engagement that aligns with predefined goals, such as making a purchase, filling out a form, subscribing to a newsletter, or any other event according to your business needs.
As the digital marketing landscape is expanding, advanced analytical tools are also in continuous evolvement. So, every digital marketer should start leveraging these advanced analytical tools to gather profound insights into user behavior.
Leverage Conversion Tracking
For every business, conversions are highly personalized user engagement events that extend the conversion analysis beyond just merely counting the purchase transactions, downloading a file, or clicking a button. For example, for this particular blog post, the conversion is the time that you are spending to read it. To track this conversion, various tracking setups like scroll depth, session time, etc. are implemented on this webpage.
By conversion tracking, digital marketers can delve deep into the user journey and scrutinize the interactive touchpoints on webpages to track conversions. Conversion tracking helps organizations as well as digital marketers to analyze the effectiveness of the campaigns and channels by evaluating ROI and assists them in better allocation of resources. To further understand conversion tracking, you can refer to the conversions guide by Google.
Monitor Lead Generation
We all have to admit that digital marketing is a highly volatile industry as the decision-making span is highly reduced because of the availability of hundreds of thousands of alternatives which both directly and indirectly impact the user purchase decisions. Several factors affect this behavior, for example, user interface and user experience (UI/UX), price, and many more.
To cope with this volatility, organizations put in lead-generation efforts but to track proper valuation, there has to be meticulous lead-generation monitoring by implementing a robust Customer Relationship Management (CRM) tool, which will assist in having better insights into the effectiveness of the channel in respect to customer acquisition by tracking the leads from inception to conversions. Tracking lead generation is one of the essential metrics to evaluate the overall ROI and channel-based ROI.
Holistic ROI Evaluation
ROI is truly a comprehensive metric because it not only includes quantitative elements but also qualitative resources as well. So, it is always recommended to consider it a holistic metric rather than evaluating it like the tip of an iceberg. To get accurate insights while evaluating the ROI, always consider metrics like customer acquisition cost, customer lifetime value, and overall campaign cost because by adopting this kind of holistic approach to calculate the ROI, any organization or digital marketers can make informed decisions to improve the performance of digital marketing campaigns.
Implement Attribution Model
In every sector of the local, national, and world economy, there are ‘n’ number of business models operating right now and for every one of them, the meaning of conversion is different. Evaluating ROI in these complex models, accurately calculating the ROI is always a challenge for business analysts, digital marketers, and organizations. The attribution model helps you to dissect the user journey and assign custom values to every touchpoint that leads to the ultimate conversion.
This model makes sure that the conversion path is rarely linear or straightforward as it helps to develop multiple interaction points, and different channels like social media, email, search, and more, which makes it more insightful to understand the influential touchpoints throughout the customer journey.
Marketing Attribution
Marketing attribution is an essential component of attribution model as it involves assigning a portion of the entire conversion to different touchpoints in the customer journey after recognizing the valuation of each touchpoint. This means that it will include the first touchpoint all the way conversion touchpoint.
Now, there are two marketing attribution models, First-Touch attribution and Last-Touch attribution. In First-touch attribution, most of the credit is given to the initial touchpoints, for example, a company started a Google Ads campaign with the primary conversion of lead form submission so that after getting the contact details from the potential customer, the company can approach him/her to drive him/her to become the actual customer. So, here in this example, more value is assigned to that lead form which is acting as the initial or first touchpoint in the customer journey.
However, on the other side, Last-Touch attribution gives higher credit to the final or conversion touchpoints. E-commerce websites are a perfect example of this marketing attribution model, where the last touchpoint where ultimately the checkout.
Conversion Attribution
Conversion Attribution focuses on conducting an in-depth analysis of the influential touchpoints in the user journey that lead him/her to the ultimate conversion. This analysis assists marketers in fine-tuning their marketing strategies by giving necessary attention to the most impactful channels by allocating the optimal budget and resources.
Predictive Approach to ROI Modelling
The predictive approach to ROI modeling contributes to the thorough analysis of the past data of interactions to predict or forecast the potential impact of various marketing channels. Return on Investment (ROI) modelling takes principles of attribution modeling a step further because by using available data to predict the performance of marketing strategies, marketers can make informed decisions to proactively optimize their marketing strategies. This forward-looking approach is essentially valuable in the highly dynamic digital landscape, where staying ahead of the trends and consumer behavior is a crucial element.
Evaluate Customer Lifetime Value: The Attribution Beyond Initial Transaction
It is always more cost-effective for the business to retain existing customers than to acquire new ones because the existing customers need less effort to drive them through the AIDA funnel. Understanding the customer’s lifetime value is indispensable for sustained business growth because adopting this model focuses on building long-term relationships with the customers. Retaining customers for the long term builds brand loyalty that makes a business able to earn maximized profits in the long run which contributes to the accurate measurement of ROI.
CLV Measurement Strategies
Measuring customer lifetime value is a crucial metric contributing to the evaluation of ROI. To accurately measure CLV, businesses can do customer segmentation to get a better understanding of the customer base and how much revenue is being generated from that segment, including customers with homogenous attributes or behaviors. Understanding the segments’ revenue generations makes businesses make informed decisions while investing in customer retention. This also helps digital marketers to formulate tailored strategies to cater to different customer segments.
Customer Value Analysis
To measure the overall customer lifetime value, it is necessary to calculate how worth is a customer for the business. It is highly crucial to understand how much revenue a business is generating from the customer or market segment. To analyze the customer value, the business can analyze it based on attributes like repeat purchasers, brand loyalty, and advocacy, which further contribute to getting a much better understanding of the customer relationship.
To Conclude, these 3 impactful strategies – Conversion. Tracking, Attribution Modeling, and Evaluating CLV for calculating ROI not only helps businesses foster long-term customer relations but also helps digital marketers analyze the efficiency and effectiveness of digital marketing campaigns. By implementing advanced analytical tools, digital marketers and other concerned authorities can seamlessly analyze the performance of their campaigns but also optimize their future marketing endeavors.
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