Whether its an email drip or a social media campaign, there are dozens of digital marketing outlets that businesses can take advantage of. However, not all digital platforms work for every brand. Finding the most profitable marketing channels for your business depends on a number of factors, including your audience, product, and industry.
To figure out which marketing efforts give you the most bang for your buck, tracking your ROI is key. Since calculating ROI looks different for every marketing channel, here’s how to track profits across your email, social media, and website efforts.
ROI Tracking Basics
Before you start tracking any of your marketing channels, there are a few things you need to set in motion. First, you need to determine a time period for which you’d like to determine ROI.
Focusing on a quarterly or three-month period can keep things manageable when you’re first starting out.
You also need to define your conversion goals. For social media, your goals might be increased post reach and follower count. For your website, this might mean newsletter signups and increased time spent on a product page. Since everything in digital marketing is connected to another channel, it’s important to define what success looks like on every platform. Then, you can determine how these small successes lead to what you really want: more revenue.
Next, you need to determine how much you’re spending on digital marketing efforts during this period. This includes tools that you use, such as subscriptions for email marketing and analytics services.
You’ll also want to factor in how much manpower goes into planning and maintaining your email campaigns. Whether you have a dedicated marketing employee or it’s a joint effort across multiple individuals, try to get an accurate count of the hours spent on this effort. In addition to hourly rates, this should also include overhead costs, like your office space, Wi-Fi and other tools that pertain to and enable a certain marketing channel.
To calculate a salaried employee’s hourly rate, use this formula: annual salary / 2,080 working hours per year x time spent on marketing channel. This will tell you how much you spend on paying employees to put out these efforts, and you can include it in your overall spend when calculating ROI.
As a reminder, here’s the basic formula for calculating ROI:
Earned – Spent / Spent = % ROI.
Now that we’ve covered the basics, here’s what to keep in mind to calculate accurate channel-specific ROI across email, social media, and your website.
Open rates, click through rates, and bounce rates are all important email analytics to keep your eye on. However, they’re not going to do much to help you calculate the ROI of your marketing efforts. Start by focusing directly on the profits gained through your email marketing instead, and your time will be much better spent.
Most email marketing services, like Mailchimp and Hubspot, allow you to view revenue gained over a weekly and monthly period. Whether you’re selling products, services, or subscriptions, these numbers are easily accessible in one place within your email service’s analytics tab.
Next, calculate your email expenses. This calculation should include the price for the email marketing services and the total pay rate of content, marketing, and design employees who worked on planning and creating the email. You should also be thinking about where your closed email leads originated. Chances are, they came from a newsletter signup, a previous purchase or maybe even a list that you bought. Tune into your core email lists to see where the email addresses originated from, and factor the price of those source efforts into your overall spend number for email.
Adjust and Improve
Take your revenue and expenditure numbers to calculate your email ROI. There are a number of ways to increase email marketing ROI, many of which go beyond an email’s content. To improve your email profits, focus on metrics like deliverability, mobile optimization, and list segmentation.
Social Media ROI
When it comes to tracking ROI, social media is much more elusive. Why? Because your social efforts are tied to all of your other marketing efforts. It’s hard to tell if someone visited your social page before signing up for your newsletter, buying a product from your site or signing up for a demo.
To better track the ROI of your social campaigns, you need to start defining the right metrics. There are a number of Google Analytics reports that help understand the relationships between social media and the rest of your sales and marketing goals.
For example, you may want to focus on reports that show the relationships between social media and:
Post engagement and reach
Social media is usually free (albeit for analytics or scheduling tools), so you may find that social revenue offsets the cost of more expensive channels.
Launch a Promoted Campaign
You can also test out promoted posts on social media to better track marketing efforts. Including a "buy now" or “shop now” button in a post can help you determine if your audience is looking to make purchases via social. If your customers respond well to this experiment, you’ll know that you can ramp up these efforts
From hiring a website designer to paying for hosting, professional websites are often a large overhead cost for entrepreneurs. However, they’re also usually the main source of revenue. To make sure you’re maximizing your website’s ROI, tune into Google Analytics to assess your visitor and landing page conversion rates. Keep track of how many sales have been made through your site during a given period – a number that’s easily accessible through e-commerce sites like Shopify and Magento.
To calculate your website costs, you might include some of the following expenses:
Designing, developing, and launching the site
Site host package
Monthly tools for third-party analytics or e-commerce tools
Manpower for maintenance and bug fixes
You also miss out on revenue every time your site goes down. Monitoring your site’s performance can help you view how much capital was lost from the quarter’s total downtime. Investing in monitoring services, however, might boost your revenue more than you expect.
To figure out which types of customers are bringing in the most revenue, segment your traffic. This helps you break down your conversion metrics one step further. With all of your traffic segmented, you’ll be able to see who’s buying what on your website, and how they got there. AJ Kumar suggests starting out with social media traffic – people who clicked on a social link and were led to your website – and organic Google searches.
If you don’t define goals, you can’t prove success. That’s why, after calculating expenses, you should enable goal tracking in Google Analytics. You goals could be unique pageviews, subscribers, or shares. Later, you can download your reverse goal path data to see which landing pages and posts are performing the best, and which ones play a role in driving revenue.
Tracking your marketing ROI doesn’t have to be a stressful task. By defining success metrics and keeping tabs on your expenses, you can calculate your ROI and start boosting revenue in no time.