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A Simple Way to Calculate the ROI of Your Marketing Investment   – Teravertical

A Simple Way to Calculate the ROI of Your Marketing Investment  

 

Traditional marketing requires you to calculate the ROI by measuring how much sales increased aftermath. Downside is, you cannot determine which of which interaction in the marketing process succeed or failed. Or rather, give you much outcome after then.

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This is a blunt metric: it might be the customer has a different influencer aside from your brand. Or maybe they have their own reason of buying your brand. Either way, you can’t be sure which interaction fall into the enterprise.

The situation nowadays has been change. Marketers already have access to data that let them track individual’s different interaction –and of course, their preferences.

This approach gave birth to “attribution modeling.” It allows companies to allocate appropriate credit to each online and offline contact, touch point in customer’s sales pipeline, and comprehend each roles in revenues that impact its results. A very good attribution model can specify, for example, which ads or keywords are the most associated with actual purchase.

There are four key stages in this model. These are:

Stage 1: Preparing the Data

This becomes the basis of any attribution model therein. Data around touch points and outcomes will be collected and will be stored in databases. Once gathered and analyze, your manager can see the pattern between each touch point and purchases. With this pattern present, hitting the important points gives way to attribution model. So then, there will be a rule of thumb to be applied such for example “give all the credits to the middle point interaction” or “give 0.5 credit to all last point of interaction after purchase.”

This may sound simple, given more investments and resources at some touch point will not fully back the ROI. However, it will sharply improve the overall marketing ROI.

Stage 2: Experimenting

Many managers will get comfortable with the rule of thumb. Often, the pattern will stay constant for as long as they want. Given all the strengths from each touch point, you can also assess weak points and start experimenting. As for example, you can turn off display advertising to test out the search cycle of a customer.

Stage 3: Applying statistical model

Big companies that has experience in identifying simple patterns from data are ready to test out more sophisticated attribution models, normally involving multivariate regression analysis or just simply using a Bayesian estimation.

These models allows marketers to have confidence and predictive model as to what touch points to invest in. Importantly, this model can explain and predict, while this model is not perfect but can improve your ROI.

Stage 4: Expand Scope of Analysis

Once the focus on establishing the understanding of customer’s journey in sales cycle, you can now start exploring wider avenues and section of section affects the customer’s sales journey or even bigger. Integrating the collaborative analysis of different data results from your own, can even make your attribution model more sophisticated.

With that being said, you can measure the role of out of the time interactions by which our customers are involved. What particular advertising works with a particular group or website and how much you can attribute to it. Implementation of this new strategy led to a substantial improvement in total marketing ROI for this company.

Mainly the target of attribution model is multi-channeled marketing. We have to understand every avenue in this technology-mediated business environment. Perhaps, attribution modeling is the best navigation tool for companies to negotiate complex cause-and-effect environments within the customer’s sales doors.