How to improve your ROI
Growing a business is a constant challenge for SMEs. You want new customers but every penny you spend on social media, advertising and marketing needs to produce results – or your company could suffer. It’s time to enter the wonderful, yet complex, world of ROI.
What is ROI?
Return On Investment (ROI) is earning more than a £ for every £ that you invest. Yet measuring ROI is one of the biggest headaches for marketers. There’s no single metric that looks at the effectiveness of your spend. Instead, you’re faced with a confusing array of marketing tools and tactics – so much so, that some SMEs give up before they’ve started. Thankfully, by following a few simple steps, you can start to make sense of your ROI
Focus on increasing income
At its most basic, you’ve two choices with ROI: to increase your income or decrease your costs. Unfortunately, decreasing your costs can cause a business to stagnate. While focusing on increasing income, gives your business plenty of options to scale and grow. But this means having the right systems in place to cope with these increased sales further down the line.
Pinpoint your profit areas
Next, identify the areas where you can most easily boost your income. Understanding which customers and activity is offering the greatest growth potential is key. Using analytical tools like the following, can help you track clicks, customer journeys and give valuable data on the most profitable parts of your business:
• Google Analytics is an industry go-to tool which helps track customer volume, their location, journey and the reasons for visits to your website.
• HubSpot is another powerful online measuring and marketing tool that can highlight key data trends.
• CRM software has a great user-friendly dashboard for identifying, measuring and tracking customer relationships.
Whichever tools you use (and it will probably be at least a couple), ensure you collect insightful data. By understanding your customers, you can ultimately gain better quality leads and a greater quantity of sales.
Raise your prices
It might sound crazy, especially if you’re a start-up, but raising your prices can give your company added value. Your customers place more importance on your product because they feel they’re getting something better for their money – and you get better quality customers. It also creates more pressure on you, to make sure your product is worth the increase. Plus, you get the extra capital your company needs to grow. But be careful how much you raise by, as increasing your prices too much could lose customers in the long term.
Set clear goals
Analytical tools should give you a good starting point from which to measure ROI. But which measurements matter most to your business? Start by considering the following:
• There are three general metrics to measure: number of sales, volume of traffic and leads.
• Decide what short and long term goals are achievable to you. Is it 1000 new leads; a 10% increase in sales or a 20% boost in traffic?
• Make sure any goals are clear and realistic, and that they are aligned with your Key Performance Indicators (overall company goals).
• Make sure you focus on results rather than activity, and effectiveness rather than efficiency, as the outcome will be more meaningful.
By looking at these points in terms of your business, you can begin to develop a clear strategy for measuring ROI.
Experiment to get results
With marketing, it’s important to test and measure different marketing channels to see what works best for your business. Then you can make it work even better. This is a huge topic but, briefly, some channels to use and test include social media, digital, content marketing and direct mail. Within these channels you could experiment with coupon codes to gain new customers; videos embedded in emails (where you can track the opening rates); or split test, using A/B comparisons to discover which is more effective.
Use powerful marketing software
Finally, with a clearer picture of ROI and the marketing that works for your business, you can employ a range of software tools designed to increase marketing efficiency even more. Good examples are:
• Hootsuite, a social media management tool which brings added efficiency to your social media marketing;
• Aweber, an email auto-responder software platform which lets you schedule email activity with a lot less hassle;
• Tweet Jukebox, for Twitter auto-pilot posting;
• WordPress (the best website platform for marketers) and Bluehost (quality hosting for WordPress) which can both give you an edge and make you more efficient.
Although ROI can seem initially tricky, SME’s need to understand it, to grow their business. Plus, there’s no shortage of online tutorials to keep you up-to-date on the latest tools and tricks. Armed with increasing profits and the knowledge of why, you won’t look back.
*HubSpot’s 2016 State of Inbound Report