Are you wondering about measuring KPI and ROI? What is the ultimate goal of your brand’s marketing efforts? Many would answer sales, but the truth is that it is more complicated than that. You can spend thousands of dollars on marketing, making hundreds of sales, and still end up in the red. So what is the real goal? To see a return on investment.

Why Measuring KPI & ROI has Become More Important

Measuring KPI & ROI

Many think that seeing a return on investment in modern marketing is simple; after all, online marketing is much more affordable than purchasing ads on television and radio. Right? Well, yes and no. A Facebook ad may be cheaper than a spot on a local TV station and have greater reach, but there are new online channels seemingly every day, and as you use more of them, the money spent adds up.

All this is to say that no matter how you are marketing, you need it to be effective and you need it to make you money. Which is why KPI and ROI matter now more than ever.

Understanding KPI

KPI stands for Key Performance Indicators. KPIs are measurable values that demonstrate how well a brand is meeting its objectives. There are hundreds of KPIs you could focus on, but it is important to select those that are most important for your niche and your brand goals. Some examples of KPIs include:

Monthly sales growth
New customers per month
Customer retention percentage
Average conversion time
Shopping cart abandonment rate
Average purchase value

Understanding ROI

ROI—Return on Investment—is a performance measure that determines the efficiency of an investment by measuring the return on a given investment in comparison to the cost of the investment. The formula for calculating return on investment is as follows:

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment

However, this is a very traditional understanding of ROI. In some cases, the return you are seeking for your investment cannot be calculated as a monetary value. For example, if you are investing in order to meet the key performance indicator of increased subscriptions to your email list, there is no money made from the act of a customer signing up to receive emails. You could receive hundreds of new subscribers and this would still result in abysmal ROI as calculated in a traditional manner, this would indicate that no ROI was seen. Except, of course, in this theoretical scenario, there was.

A few KPIs for measuring Digital Marketing ROI

To help you get brainstorming ways you can utilize KPIs and ROI for your brand, here are a few KPIs to look into.

Customer lifetime value
Cost per lead
Cost per acquisition
Website engagement
Landing page conversion rates
Traffic sources
Campaign success indicators
Social media interactions
Pages ranked
Mobile device tracking

If you’re wondering about measuring KPI and ROI, I hope I’ve given you a few things to consider.

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June 29, 2018

Why Measuring KPI and ROI has Become More Important

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