ROI is important to note when running a business. You never want to have low ROI because it simply means you’re not profitable. This may be why many companies are undecided when it comes to how much they should spend on digital marketing. The truth of the matter is that the results often outweigh the money invested - because digital marketing is an investment, and a good one. The short and long term impact that digital marketing can have on a business is shocking and these are the facts that many companies simply miss.
What is ROI and How is it Calculated?
ROI stands for Return on Investment. The amount of money you have invested versus the amount of money you have made on that investment. At Blend, we understand why you would need all the information you can get on why you should invest in certain marketing strategies so we’ll lay them out for you.
There are multiple niche forms of ROI including the recently popular SROI (Social Return on Investment) which assists in understanding the value proposition of environmental social and governance criteria used within socially responsible investing. For example, recycling water within your factory and replacing your lighting with environmentally friendly bulbs will have a cost that could impact your traditional ROI but the benefit to the environment would lead to a positive SROI.
Other variants include social media statistics ROI which determines the effectiveness of social media campaigns, marketing statistics ROI which identifies the return attributable to advertising or marketing campaigns, and learning ROI which determines the information learned and retained as a return on education.
When talking about your everyday ROI, it is calculated by dividing your profit which was earned on the investment by the investment amount itself.
What Marketing Strategies have the Biggest Impact on ROI?
There is a large variety of marketing strategies that could work for any business, but when it comes to Shopify stores, you don’t have some things that could impact a physical store’s ROI. What is great is that what you have works better. There are four specific ways of digital marketing that can make an impact on your business, the traffic to your site, and your Conversion Rate.
SEO (Search Engine Optimisation)
Growing in popularity, many focus on the SEO of their site to make it organically appear at the top of the search results of Google. Using the right words in the right spaces can make all the difference. And there is a reason it’s become more and more popular by the year. It essentially costs nothing. While it’s built to drive long-term revenue, the earlier you start, the better.
SEO helps drive relevant traffic to your site, meaning that only the people who want to see your products will see them. While many try to target a broad audience, this will cause unhappy potential customers, useless metrics, and a waste of time and money. Targeting your audience more specifically will drive potential customers that you can nurture from their first experience right until they hit “Pay” - and beyond (because we all know your relationship shouldn’t end when they’ve bought a product).
With an average ROI of 22:1, SEO has a 2,200% ROI from this marketing strategy if implemented correctly.
Reportedly one of the highest forms of digital marketing, email marketing is not dead any time soon and should be honed in on as soon as possible. While this method can cost money, the ROI is worth its weight in gold. It allows you to build a connection with your customers on a new level, gaining their trust and loyalty. Some of the drawbacks to email marketing include data collection and the understanding of how to use said data. We at Blend specialise in email marketing, though so there’s no reason you shouldn’t have email marketing as one of your top strategies.
To utilise email marketing to the full extent, you will need to analyse things like Open Rate, Conversion Rate, Bounce Rate, Unsubscribe Rate, Click-through Rate, and many more, not to mention segmentations and creating the perfect flow for each stage in the customer journey. But that is the simple beauty of email marketing - it enables you to connect with your customers at each and every point of their customer journey, ensuring you’re at the top of their minds in those specific and sensitive moments, saying all the right words.
Email marketing nails SEO with an ROI ratio of 42:1, 4,200% ROI if implemented correctly.
Social Media Marketing
While this strategy doesn’t take excruciating amounts of knowledge, depending on your campaign, it could cost you very little or hundreds or thousands per month. The reason this method is so popular and lucrative is that it’s popular - with your target audience. They spend all day every day on these sites and you can meet them where they are. It helps them discover your brand, product, launches, sales, and customer service. If that wasn’t enough, it can create a unique connection with your customers and you could even run social media based competitions to increase your marketing reach.
PPC (Pay Per Click)
PPC is what the name says - you’ll have paid ads that show up on Google, right at the top, and you’ll pay every time someone clicks on it, even if they didn’t convert. That’s the shortcoming of this digital marketing strategy and it simply means that you’ll have to boost your website imagery and copy to impact that conversion rate.
The great part about PPC is that it targets customers who are ready to make a purchase. This means that generally, you won’t have to put in too much effort on your side to sell the product but simply state why your product is better, and create an easy and attractive customer journey once they click on your ad.
The best way to calculate your ROI on your PPC strategy is by taking the ROAS (Return on Ad Spend) and minus the cost of the investment, then dividing the answer by the cost of the investment. For example, if you made 200 pounds from an ad that cost 50 pounds:
How to Improve the ROI of Your Digital Marketing
While it may seem like something you can work out, launch, and leave, digital marketing needs to be continuously updated and analysed to see what’s working and what isn’t. Understanding the value of the data you collect, and knowing how to use it will drastically improve how you approach your digital marketing strategy. Using your data to personalise your marketing will have a large impact on your marketing and conversion rates as well, and we’re not talking about using the customer’s first name in an email. Here, we’re talking about using the data you’ve collected to understand your customers, what they love, who they are, and what they want from you as a business.
Personalising the marketing they receive will increase the likelihood that they will open your emails, click on your ads, and hopefully (with an optimised funnel) go all the way through to their cart and pay for the item they want. Not only this but ensuring you keep up with your customer's post-purchase is incredibly important as it shows you care about them. Having a carefully structured NPS survey that collects the right information at the right time will give you all the data you need - good and bad.
Ensuring you have goals for your ROI will keep you on the ball. Make sure you implement the acronym SMART. We all know it, but here’s a recap: Make sure your ROI goal is Smart, Measurable, Achievable, Relevant, and Time-bound. A great marketing ROI goal has a ratio of 5:1, while 10:1 is pushing the limits of your expectations. Achieving a marketing ROI of 10:1 and higher isn’t impossible though, so don’t settle for complacency.
Having customer service that is easily accessible, knowledgeable, and helpful will also help your digital marketing as customers need to know that help is there should they need it. Whether it’s AI or a real person, there should be a solution to their problem. If there isn’t, you’ve wasted a lot of money on marketing that gets your customers to where they want to be, but not where they need to be.
Blend and Boosting Digital Marketing ROI
At Blend, we focus on helping our clients achieve their goals. We ensure that we are updated on the latest technologies so that all your applications are integrated and data can be collected in a simple manner, while also knowing exactly how to use that data to market the right products to the right people at the right time. If you’re looking to explore your digital marketing and boost your marketing ROI, book a call.