What Is Marketing ROI (& How to Leverage It)?

If you’ve ever felt like you’re spinning your wheels with your ecommerce marketing, you need to measure your return on investment (ROI) to figure out what’s working & what’s not. But it’s more than just looking at your marketing budget & slashing numbers. A good ROI strategy also reveals what products sell best, audiences you resonate with, & channels that are most effective for your business.

We’re not going to lie. Measuring your marketing ROI can get as messy & complicated as you let it. Or you can drill down & build a foundation that simplifies your marketing, metrics, budget, & beyond. Here’s how to get started.

Measuring Your Marketing ROI Formula

Marketing ROI works much like a digital ledger for your ecommerce business that keeps track of your expenses & results. ROI is a metric that lets you know if you’re leading a positive or negative outcome from ad spend to content creation. Without measuring ROI, you’re just guessing at your marketing results.

Without measuring your efforts, you could also overlook valuable information. For example, you may find that a small ad with specific copy & wording yields big results while your Instagram Stories & social media posts are falling flat. 

To figure out your marketing ROI, use this straightforward formula:

ROI = (Net Profit from Marketing minus Marketing Costs) / Marketing Costs

Here’s a breakdown of how it works:

• Net Profit from Marketing: This comprises the revenue generated directly from your marketing endeavors, minus all marketing-related expenses.
• Marketing Costs: These encompass all expenses linked to your marketing activities, ranging from ad spend to team salaries.

When your ROI is positive (whether you’re using a number or percentage), you know you’re seeing results. But a negative ROI will show you’re spending more on marketing than you’re earning back.

Budget is everything in marketing, & ROI helps keep you on the right path. But there are more benefits to ROI than how much you’re spending, starting with efficiency. When you have a clear idea of what you’re spending versus the results, you can double down on what’s working & dismiss what’s not. Fine-tuning your brand & earning more organic leads are also benefits to your marketing ROI.

How to Leverage Marketing ROI

Once you have the formula down for measuring your marketing ROI, here’s how to leverage it for e-commerce success.

1) Set Clear Marketing & Revenue Goals

Start by defining specific, measurable goals for your online store’s marketing campaigns. Whether it’s increasing website traffic, lead generation, or sales conversion, having clear objectives simplifies the process of measuring your ROI.

2) Use Analytic Tools

To properly leverage marketing ROI, you need the right analytic tools & platforms that can help you track & measure the performance of your efforts. Start with Google Analytics & your seller’s platform store analytics to provide valuable insights into website traffic & conversions.

3) Attribution Modeling

You need some kind of attribution marketing method to figure out which methods convert best for your online store. For example, traffic from Instagram leading to a conversion is one way to assign attribution.

But sometimes attribution that can’t be measured is more anecdotal. For example, if your unique, customized water bottles are mentioned in someone’s travel-themed Facebook group, you may not know for sure who converted. But you can make note that you saw an influx of traffic from that group & monitor for a spike in future sales to form correlations.

4) Track All of Your Marketing Expenses

Tracking your expenses is key when trying to figure out your marketing ROI & leverage it. Make sure you accurately account for every marketing expense, including those hidden costs like how much time you spent creating an email marketing campaign. The goal is to ensure an accurate ROI calculation for reliable insights.

5) Monitor & Analyze Your Results

Measuring your marketing ROI demands consistent monitoring & analysis to fine-tune your marketing efforts. Set up Google Analytics & Google Search Console to track performance. Most online selling platforms offer user-friendly dashboards for monitoring traffic sources. Understanding the data, starting with product performance & top-performing content, is the key to leveraging your marketing ROI for success.

6) Consider Hidden Marketing ROI

It’s important to step back & look at the big picture about your ecommerce business. Start by identifying areas of your business that impact customer satisfaction, from repeat orders to leaving positive reviews. For example, you may struggle with production quality & on-time shipping. Outsource the process to CustomCat instead & increase customer satisfaction while reducing your overhead. 

Upload your designs to your CustomCat library, apply to your favorite products, grab an easy integration, & we’ll do the rest. When someone places an order, we’ll get to work fulfilling it & shipping it out with a white label to reflect your online business. You earn every time a sale is made with no order minimums & no inventory to carry.

Just like customer service can impact your marketing ROI, so can your approach to how you run your business. Use these ROI tips, harness the power of CustomCat’s POD services, & throw yourself into your online store to give your customers the best possible experience for repeat sales. Get started with CustomCat here.

 

How do you measure marketing ROI for your business? Share your best tips in the comments below!