Return of Investment (ROI) is a tool used to better determine how profitable a business is based on how successful it is over time. It is calculated by dividing the profit earned on an investment by the cost of that investment and helps to take the guesswork out of making future business decisions.
ROI is especially important in the marketing of a business because it can measure the degree to which marketing efforts contribute to revenue growth.
Marketing ROI can help determine the following:
- Marketing Budget
- Spending Decisions
- Measure Success of a Marketing Strategy
- Analyze the Competition
While ROI is generally used to determine the success of a business, it also can be used to justify any marketing spending and budgeting for ongoing and future business decisions.
One of the main purposes of marketing ROI is to determine a marketing activity’s growth, which is necessary for marketing to be a success. Even the best marketing ideas can become ineffective and being aware of how a marketing strategy is performing should always be of high importance.
Marketing requires money for various reasons and measuring marketing ROI can help make it clear of how much a business should not only budget for marketing purposes but also if it’s best to reinvest in the same marketing strategy.
When utilizing marketing ROI as a determining factor on how effective a marketing strategy is for a business it can be beneficial with increasing engagement, brand awareness and customer satisfaction. An effective marketing plan will strengthen brand awareness and customer relations over time and measuring a business’s marketing ROI can help determine the success of a marketing strategy.
Knowing the marketing ROI can help a business make key marketing decisions and show which strategies are working best allowing a company to focus more on those that bring a return and to spend less time and money on those weaker strategies.
Accurately measuring ROI can help a business measure their success and establish a baseline that can serve as a reference for future efforts. Understanding the impact of individualized marketing strategies and their overall revenue growth can allow marketers to establish a baseline to measure their success and make any adjustments in order to maximize growth.
A business knowing their competition can be the best way of staying ahead. Keeping track of competitors by remaining up to date on their sales generated and how well they utilize their marketing strategy can be helpful in determining if and when it may be time to step up a business’s marketing plan. The key is to understand the competitive advantages and disadvantages and develop an effective strategy to create a competitive advantage in the future.
If you require additional information regarding marketing ROI or if you have any questions about how we at Intergetik Marketing Solutions can help, please feel free to contact our office at (314)749-0492. We look forward to speaking with you to discuss how we can help meet all of your marketing needs!