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Return on investment

Reaping the Marketing You Sow

return on investment, n. \ri-‘tərn ‘än in-‘vest-mənt\

Finance 101 taught us how to use return on investment (ROI) to evaluate the efficiency of an investment. A simple formula expressed ROI as:

ROI = (gain from investment – cost of investment) / cost of investment

and provided sound counsel whether to invest in a given opportunity (positive ROI) or pass (negative ROI).

The formula is indispensable when you can pull numbers from a balance sheet to evaluate one-time capital projects. But what about your website and other marketing expenditures? How do you quantify their performance?

Meeting Your Goals
There’s no one definition of so-called marketing ROI. But you can begin by measuring your website’s performance against your goals for your online presence, and whether it’s helping your business move toward your long-term objectives.

  • Is your target market visiting your website? And have your sales and/or leads increased? Lots of visitors without conversion to customers isn’t tremendously helpful.
  • Are you providing an opportunity for dialogue, and listening to what your customers say? If you hear criticism, are you making changes to meet customers’ needs?
  • If you have an ecommerce site, are people completing their sales or abandoning their shopping carts?

Creating Conversations
It may be more difficult to measure, but you can’t deny the power of conversations: word-of-mouth marketing can increase awareness—and the value—of your company, product or service, and brand.

  • How does visiting and interacting on your website make people feel? Don’t forget how emotional connections can affect purchasing decisions.
  • How is your brand performing in terms of building and sustaining relationships with customers—and other visitors who influence customers?
  • How do your customers behave? If your customers are talking positively about their experiences with your company and your product, they’re helping build your brand.

The answers to your website’s performance may not be on your balance sheet, but don’t think for a minute that makes an online presence a poor investment. Ask (and answer) the right questions, and you can determine with confidence what kind of return your site has to offer.

Further Reading

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Peter Havranek
Founder and CEO

For nearly 20 years Peter has run magIMPACT, a digital marketing firm that specializes in providing expertise and resources to independent business owners.

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