How to Measure Marketing with ROI & KPI’s

ROI_KPI

Strategic planning season is upon us and one area that is sure to be reflected on, evaluated and further determined is performance tracking.

Tracking is one of the most important aspects of marketing. Did a television commercial recruit new members, donors or clients? Did a social media ad deliver more click-thru's to your website? Did a direct mail piece result in product conversions? All of these initiatives are trackable and while you may associate them with ROI (return on investment), some metrics are tracked as KPI’s (key performance indicators).  What is the difference you ask? Tracking ROI and KPI are linked to different marketing initiatives, as noted in the chart above.

Ultimately, asking a few questions will help you determine if you'll use ROI or KPI's for measurement.

  1. Can you follow the conversions process from lead through ultimate conversion (purchase, donation, etc.)? If so, you'll likely use ROI.
  2. Is the specific tactic or channel awareness based and you plan to drive response to your homepage? If so, you'll likely use KPI's.
  3. Are you utilizing tracking mechanisms like dedicated phone lines or landing pages with forms? If so, you should strongly consider ROI.

ROI measures the cost-efficiency of an initiative by analyzing the monetary gain or loss generated by an initiative relative to the amount of money invested. Some marketing tactics tracked using this method, including paid search ads (how much did the ads cost vs. how much revenue was generated from people converting on these ads) and direct mail (how much the campaign cost vs. how much revenue was generated from individuals converting on the direct mail offer).

KPI, on the other hand, is used to evaluate the success of an initiative. Success is usually measured by benchmarks based on where a tactic or overall marketing sits currently and what the ultimate goals associated are. KPI's might focus on overall performance or focus on the success of specific departments or initiatives. Social media is a great example of a trackable KPI channel. At its core, social media is a conversation, and how you interact with your audience online can play a big role in where they choose to do business or donate. How you define social media success is up to you. Perhaps it’s looking to raise the number of followers, clicks, likes, shares and comments, or it’s hoping to improve your posts’ reach.

No matter how you’ll be tracking your various marketing initiatives, one thing is consistent for both — identify what success looks like and then set goals and benchmarks your progress. Is there a monetary goal you hope to hit? What loss would be detrimental? How many Facebook followers do you hope to have by the end of the year? As time goes on, you’ll want to continually monitor performance, and you may need to make adjustments based on your findings and insights. Tracking all of your marketing tactics separately may seem tedious, but in the end, you’ll be able to make more data-driven decisions.

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