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Measuring ROI helps direct future strategies


You buy a house, take care of it, maybe make a few improvements here and there, and as long as the housing market doesn’t tank, you’ll likely realize a return on your investment (ROI) down the road. When putting money into anything, it’s natural to want to see a return on that investment. When it comes to marketing, ROI is how you measure the success of a particular project or strategy. Not only does it tell you if you realized a return on your investment, but it helps direct future strategies and allows you to make adjustments for an even greater return.

ROI is determined by two factors: investment made and the value or gain realized. Simply stated, it’s revenue to cost. There are many ways to measure ROI, depending on the medium employed—digital, print advertising, direct mail, training, etc. And along with that, there are many different outcomes you can measure: sales, customer satisfaction and loyalty, shares, retweets, likes, knowledge increase and process implementation to name a few.

Search the Internet for ways to measure ROI, and you’ll get hundreds of thousands of hits. It’s a clear indicator that there isn’t just one all-encompassing method to use. However, there is one essential step to take at the outset if you want to accurately measure ROI. First and foremost, is determining the key performance indicators (KPIs). These are the measurable values that demonstrate progress in achieving overall goals. They are also known as lead measures, meaning they lead to the achievement of your goal, or lag measure.

Examples of KPIs are increased customer satisfaction scores, quality improvement (zero defects) and decreased turnover (employee, customer, sales network). All of these can then lead to an overall goal such as higher revenue, profit, market share, growth or shareholder value, which are lagging indicators and can only be measured after a marketing strategy has been activated. When you establish KPIs or leading indicators first, you can monitor your strategy and make adjustments as needed to ensure you realize the results you desire.

Once the KPIs for a marketing program are determined, the next step is to decide what method will be used to measure its success. If it’s a direct mail piece, it might include a Personalized URL (PURL) that directs recipients to a microsite. You can track the number of people who visit a site using analytics tools. Email campaigns can include a special offer that recipients must click on to redeem. More comprehensive marketing campaigns will have multiple methods for measuring success.

In addition to measuring marketing and advertising programs, you can also assess the ROI of training. For example, eLearning, web-based training, can be measured using the Kirkpatrick model. If you think of it like a pyramid, the base of the model is called Reaction. This is measured by gathering feedback from learners using tools like online surveys. The second level measures the level of learning, which can be determined by assessments at the end of the course. Behavioral changes is the next level and can be more challenging to measure. Depending on what participants were trained on, you might be able to measure improvements in efficiency, customer satisfaction, sales, etc. The final level is business impact, which can be measured through increased productivity, improved quality, fixed right the first time scores and more.

It is important to note in measuring ROI when your overall goal is to increase sales and revenue, there are extraneous variables that are out of the control of even the best marketing, advertising and training programs. The quality of a company’s salesforce, the rise and fall of the economy, even weather can all be factors that impact the success of a program. It’s also worth noting that a marketing campaign will have more than one impact at a single point in history. For example, a series of ads may not raise sales right away, but can have an effect over time. Even ads with special offers that have expired may still result in a sale simply by raising awareness of a product or brand.

Think of ROI as a Return on Inspiration. If you have a great idea, test it and measure its impact. If you don’t get the return you hoped, tweak the idea and try it again. With a few adjustments, you can realize a return on your investment and your inspiration. What you learn by measuring Return on Investment can help inform even more effective strategies in the future.

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