ROI, acronym for Return On Investment (return on investment) is an indicator that allows companies to know how much they have gained or lost with their investments. It is very common to calculate the ROI in the strategies that marketing uses. Knowing these numbers is vital to whether your business is doing well or not.
Whenever your company makes an investment, be it the purchase of equipment or the hiring of training for your team, an expense is made.
To find the return on this expense, that is, if the investment was worthwhile, a metric called ROI is used;
It is extremely common in the marketing sector of companies, especially when investing in campaigns to attract customers.
Knowing the return on investments provides a guide for management to know how effective the actions are being.
It is undoubtedly an important metric that your company can no longer ignore.
Therefore, in this article, we will talk a little better about what ROI is and how it can be calculated in companies.
We will also address some points of attention that help to make better decisions on a daily basis.
And yet, we will talk about some effective actions to optimize ROI in marketing your business.
First of all: what is ROI?
ROI, the return on investment, is the metric that lets the company know how much it gained or lost when investing in a certain stock.
It helps to identify, within the marketing strategies, which campaign is a good deal for your company.
This calculation, in general, can be done on top of paid media actions (such as Google Ads or Facebook Leads Ads), hiring new tools, training, among others.
Basically, everything that receives an investment on top aiming at a result can (and must!) Have its return calculated.
In this way, managers are able to have a broad and clear vision on which investments are worth focusing on.
Decision-making is obviously more accurate, directing resources to perform even better in what today already brings a positive return.
If we compare the way the results of investments in marketing were previously calculated, we will see even more the importance of knowing the ROI of your strategies.
This is because the shopping journey has changed a lot. Today, the consumer has bargaining power in virtually all segments.
The offers are many. Competition has grown, so you need to optimize what you’ve created to impact your potential customers.
When you only had traditional media to advertise, it was much more difficult to know the impact on customers.
Especially because, in general, the media were quite widespread. There was no specific targeting as you see on social media and Google ad platforms.
More than that: the speech itself did not generate value. It was not specific and did not focus on the pain that a potential consumer has.
This is, therefore, the advantage that digital marketing has over the old formats: being able to measure ROI and knowing if you are going the right way.
And how to calculate your company’s marketing ROI?
That scenario of difficult measurement, today, does not need to be present anymore. Your marketing actions need not be seen as expenses.
These are investments capable of enhancing the acquisition of customers for your business.
And, to know how effective lead generation strategies are, understanding how to calculate ROI is a fundamental part of marketing management.
It is a simple calculation, in fact. It is made using the following formula:
- (Return on investment – cost of investment) / cost of investment.
Suppose that the current result of your marketing team is R $ 400,000.00 monthly.
After a series of training sessions, which cost R $ 50,000.00, the application of new techniques causes monthly sales to double, reaching R $ 800,000.00.
Applying the formula, we have: (400,000 – 50,000) / 50,000 = 7. That is, for each real invested we have a return of R $ 7.00.
In other words: the return on investment was 700%.
Easy, right? Use this for all company sectors that have had any type of investment for a specific improvement.
Why is it important to calculate ROI?
Strategically, especially in marketing, knowing your ROI allows you to know which media you perform the best.
Thus, you will know what should remain within the strategic marketing planning and you can ask, for example, for an increase in funds.
Having numbers and proving effectiveness, you can justify an increase in investment for a CEO of a company, for example.
Likewise, based on ROI, it is possible to establish goals and objectives – both sectorized and individualized.
It is a way of giving a much more accurate feedback to your teams, as well as making a fair assessment of performance on each employee.
After all, to have management, you need to have control. And how will you be able to control without relying on numbers? Without having to do the analysis?
Knowing how to calculate ROI is to avoid throwing money away. You will not immediately know which strategies work better than the others.
There, again, is the importance of measuring the return they have. Everything has to happen in some sense, aiming at a return.
If not, first: why do it? Second, how do you know if what you have idealized and accomplished can be replicated or not?
Calculating ROI can guide decisions in your company
Resources are increasingly scarce and one of the main concerns of managers today is finding ways to cut costs.
However, great care is needed so that the cut does not end up reaching the expenses with the investments that bring return for the business.
ROI can help you identify where to spend your budget in order to maximize results.
It can be calculated for an entire company, for an industry, or for a specific stock.
It allows you to evaluate the results of a training or to predict the results of a marketing campaign.
It is possible to monitor compliance with goals, both for immediate and long-term actions.
Again: with it, you have more coherent objectives and identify the return period for each investment.
With objective projections it is much easier to make safe investment decisions, with real possibilities of return.
However, it is good for you to know that more important than setting goals consistent with reality, is to do constant monitoring.
Thus, it will be possible to correct the course, whenever the situation demands.
Also, be aware that ROI in some industries can vary over short periods of time. This is mainly due to seasonality.
And here we can, for example, consider the increase in sales on a certain date.
Therefore, understand the context before calculating the return that determines what action or sector is bringing to the company.
3 ways to increase ROI in your company’s marketing
Understanding the ROI of your actions is the first step. But, of course, all companies want to improve and get the maximum return possible.
Once you know your numbers well, you need to optimize them. Do even better with what you have in hand to later invest in what is really effective.
Your company wants to sell more and better. He wants to have a high income and show his potential customers that he really is a reference in the area.
Therefore, we have separated 3 actions for you to optimize your ROI especially in the marketing sector.
However, there are actions that can be applied in basically any area within companies – regardless of the segment and also size.
1 – Measure the results obtained daily
For those who want to always have assertive strategies, aimed at improving results, control needs to be daily and close.
So, for example. If you ran an ad campaign on Google, you need to have a dashboard set up that shows its performance in real time.
And, from there, assess how you’re doing: is the click cost too high? Is the conversion below expected?
When you measure results on a daily basis, you can cut what’s not working before you burn all your money.
In the same way in the commercial sector, for example, after doing sales training after identifying problems in the sector.
Were the results you saw that were falling short improved?
To measure this case, make use of a good sales system, such as a CRM, with complete reports and record of the entire history of interaction with customers.
Whatever sector it is, monitoring is of paramount importance. It is he – and he alone, with no guesses – that will indicate the measures to be adopted.
2 – Qualify your content
There is no mystery. The better the content that your company produces, the more relevance your brand will have to your audience.
Content marketing – it is not new to anyone – is the one who shows how reference an organization is in the segment in which it operates.
Responding, in a didactic way, the pains that the client has, delivering the value he needs and when he needs it, is a good practice without a doubt.
Good SEO-optimized content makes more traffic come to your site. And that, of course, will engage your audience.
So, if you invested, within your marketing area, in the production of content, it is a very efficient way to see your ROI increase.
Especially because it will not be necessary to spend so much to attract more people.
Good content, well optimized and that responds to the pain that the persona of your business has, is capable of bringing a good return with little investment made.
3 – Have the ability to learn from mistakes
Learning from your mistakes and avoiding repeating them is something that is undoubtedly wise.
But, first of all: how do you know if you made a mistake or not if you don’t follow your results closely?
So, after having a close monitoring habit, it is important to understand what and what you missed and discard.
Obviously mistakes will happen and nobody is saying no. But when you identify them quickly and understand why, you can eliminate those actions as soon as possible.
Goals will guide you and, within this path, the important thing is not to lose focus.
Take the time to analyze what is necessary and always keep trying to generate value for your client.
If that happens, you will be on the right track to grow and, of course: sell more and better.
So, how can we help you?
If you were unsure about the content or want to know better how to increase ROI in marketing and sales at your company, talk to a consultant today.
Enjoy and read two articles that will help you have better business results in your business.
The first talks about how to attract customers intelligently to companies.
The second addresses the importance of constantly generating value throughout the customer’s journey.
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