The Breakdown: Measuring Strategic Marketing ROI

By Janice Masters| 4 Min Read | January 7, 2020
Calculating ROI on Advertising | How to Calculate ROI | Employee Doing Calculations at Desk

Businesses are spending a lot of money on their strategic marketing. Global spending is estimated at around $2.1 trillion for 2019, up from $1.6 trillion in 2014. But how do you know when and if this money is well spent?

Strategic marketing plays a vital role in the success of a business because it attracts the right customers and establishes the long-term engagement and relationships you need to keep them coming back. That’s why you can’t make a difference to your business’s bottom line without first creating a solid marketing plan. And marketing doesn’t start after you have developed a product or service – it begins when you start planning for your business.

The Role of Strategic Marketing

While every marketing campaign you run should be thoroughly planned out, your business needs a strategic marketing plan to guide the overall efforts.

A strategic marketing plan identifies your goals, target audiences, your methods of communication, and the marketplace where you are competing for business. It can be a great guide to growing your business, helping it adapt to evolving marketing conditions, smarter competition, and more demanding customers. It also ensures that all your marketing efforts (digital and print advertising, website, direct mail, etc.) are well-aligned with your overall vision.

How to Find Out if Strategic Marketing is Generating ROI

It takes strategic thinking to create a strategic marketing plan. You have to clarify your goals, figure out the future of your business, and ultimately strengthen your marketing prowess.

The implementation involves putting the design, execution, and scheduling to work. You will need to set up specific tasks and timelines while also gathering the necessary resources to execute it properly.

After planning and implementation, comes control and evaluation.

The real value of a marketing plan lies in its effectiveness. It is essential to measure your results against the standards you set at the planning stage.

There are several ways to measure the results. For example, you could measure customer survey scores, referral sources, the conversion rate of your advertising campaigns, an increase in revenue, an increase in new buyers, and decreased complaints, and more. If you find that your progress doesn’t match your expectations, it’s crucial to determine why that might be the case.

Perhaps your ads aren’t as effective as you thought at attracting new prospects. Maybe you need a more comprehensive website with more engaging content to describe the new services. You’ll also need to monitor how your competitors are doing. Does the success of your product affect other items, their pricing, and campaigns? Are they releasing new products at new price points to cut into your audience?

In other words, the actions, goals, and strategies of a marketing plan aren’t set in stone. They require you to experiment and evaluate the results until you achieve the right mix.

Calculating Strategic Marketing ROI

While there are several different ways to determine the campaign ROI of strategic marketing, the most-used formula is relatively easy:

(Sales Growth – Marketing Cost) / Marketing Cost = ROI

This formula assumes that all sales happen because of marketing efforts. If you have a different setup and want a more realistic view of your marketing ROI that accounts for organic sales as well, use this one: 

(Sales Growth – Organic Sales Growth – Marketing Cost) / Marketing Cost = ROI

It is important to consistently define and understand what constitutes the profit and expenditures for your team, so consider accounting for overheads, internal expenses, media buys and agency fees, and any other expenses.

These formulas are based on measuring the increase in sales, but some strategic plans have a different aim altogether. ROI for hybrid campaigns, for example, has to be measured by how many leads converted into sales over time.

We can also calculate the strategic marketing campaign ROI using the Customer Lifetime Value formula. This helps clarify the value of each customer’s relationship with your business and the long-term value of a campaign across the customer’s lifecycle.

Customer Lifetime Value = (Retention Rate)/ (1 + Discount Rate / Retention Rate)

The Last Word

Remember that while strategic marketing expenses hit the Profit & Loss statement immediately, the money spent will continue to deliver on brand equity for years to come.

Your strategic marketing plan isn’t only affecting profits; it’s strengthening equity and customer relationships for a very long time. Make sure to count that in when measuring its ROI. Ready for a strategic marketing campaign that delivers down to the very last cent? Contact the marketing experts at C-leveled to establish where you are, where you can go, and how we can help you get there. 

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