The aim of this article is simple. By the end of this article you should be able to easily estimate the ROI of your digital marketing campaigns based on the data you already have.
When you make any business decision you need to ensure that you measure your potential Return-on-Investment (ROI). When I do this, I always split it into three possible outcomes…
- The MAR (Minimum Acceptable Return)
- The PPR (Perfect Potential Return)
- The EBR (Even Better Return)
(Yes, these are made up acronyms…. Lets call them Adamisms).
Coming up with three potential forecasts, helps you align your goals and expectations by coming up with a best case, worst case and the perfect return. Using these figures, you will be able to make more calculated risks and make clearer decisions on the level of your marketing investments.
When it comes to your digital marketing, you should be able to benchmark and estimate your ROI very easily with a few small calculations. You can do this based on the data you already have.
To get to a basic figure you need to:
- Know how many monthly visits you receive to your website
- Know how many leads you receive per month
- Calculate how many of these leads convert into a sale
- Work out what your AOV is (Average Order Value)
You will also need to get an industry benchmark of the average conversion rate increase for your particular style of business. It will differ depending on the type of business you are, and even whether you sell products or services.
Working out your AOV
If you’re not sure how to work out a basic AOV, all you need to do is count how many invoices you raise in a typical month, then take your total revenue for said month, and divide it.
For Example:
In October Peter raised 100 invoices and had a turnover of £140,000. So, £140,000 / 100 invoices = £1400 average order value.
Why is understanding your ROI so important?
With your marketing strategy understanding what you should expect to get out of the ongoing digital marketing will help you make more calculated decisions when it comes to things like Ad spending and general budgeting.
When you work with Damteq, we can fully manage your digital marketing, end to end. We help you understand your ROI and work with you closely to focus on the parts of marketing that are proven to grow your business. We help you reduce your overall wasted marketing spend by making every campaign more efficient.
To help you understand your ROI, we’ve created an online calculator. We have also included some of the main industry benchmarks of what you can expect.
