This is a guest post from Gingr's partner, Broadly.
As a pet-care business owner, you're always looking for ways to increase sales and grow your business. Marketing is one of the most important investments you can make to achieve these goals. But how do you know if your marketing efforts are paying off?
What is marketing ROI, and why does it matter?
Marketing ROI (return on investment) measures how much profit your marketing efforts generate for your business. By calculating your marketing ROI, you can see exactly how effective your marketing campaigns are and decide where to allocate your marketing budget. Without marketing ROI, you could waste money without realizing it.
Here are beginner tips for measuring marketing ROI for your pet-care business.
Every expense should be justified
Before spending your precious dollars, think about:
- Why are you doing this particular thing?
- What goal is it supposed to be achieving?
- How will you measure if it was successful?
A clear objective for every expense will help you calculate if the marketing activity was worth the money.
For example, if you're investing in an optimized, mobile-responsive website, your goal might be to increase sales by 10% within six months. Then, you can track your progress and see if your new website is growing sales as you expected.
It’s also worth noting that having pet business software that can help you integrate with your accounting software and track expenses can make this process far simpler and less stressful.
Distribute your funds among multiple tactics
Ideally, you should not put all your eggs in one basket. It’s critical to experiment and monitor your marketing investments to see what is working the best so that you can prioritize marketing spend for those tactics that are most fruitful for you.
Reach customers through a mix of different digital marketing techniques such as 2-way SMS texting, like the kind that Gingr provides that can help make you an expert marketer in minutes.
Another example is reputation management software that can help you monitor and grow your online presence through features like automated review requests, which can boost website traffic and lead generation efforts.
Establish baselines and what you’ll be measuring
Before starting a marketing campaign, it's essential to establish your baseline. This is the level of performance you saw before you started the campaign.
So, for example, if you’re looking to increase new business, you’ll need to know how many new customers you’re generating per month today and from which channels before and after your marketing campaign.
Small business reporting features like Broadly’s Dashboard reporting tool can help you measure the number of leads and new customers you’re getting from using its marketing tools. This insightful data helps you monitor your marketing budget and decide where to allocate your marketing spend.
Speaking of budget, properly managing your finances is a must for pet-care businesses looking for every opportunity to be more efficient and cost conservative.
So, if you’re hoping to drill down beyond your marketing efforts to analyze every aspect of your pet-care business, Gingr makes it easy to draw insights from financial reports (revenues, taxes, commissions/tips), daily operational reports (feeding, medications), user success reports (user logs, birthdays, vaccination status), and more.
Okay, but how do I calculate marketing ROI?
Hopefully, by now, you are convinced that marketing ROI is essential to measure the success of your marketing strategy. But how do you calculate it?
There are a few ways of calculating marketing ROI. The most common way to calculate marketing ROI is to subtract marketing costs from total profit, divide it by the marketing cost, and then multiply by 100 to make it a percentage.
You can do this for your total marketing spend or a specific campaign.
Marketing ROI formula: ((Sales Growth - Marketing Cost) / Marketing Cost) x 100
For example, if your marketing campaign generated $5000 in profit and cost $1,000, your marketing ROI would be 400%.
ROI calculation: ($5000-$1,000) / $1,000) x 100 = 400% marketing ROI
You can calculate organic growth by looking at how much your sales increased historically without marketing investments. Again, baselines are critical!
What is a good marketing ROI?
The answer to that depends on your business and your overhead costs. Your marketing returns must be enough to cover the operational costs of that new business. If your company operates with a 50% profit margin, you will want a 100% marketing ROI to break even.
Track your marketing ROI regularly to see how your marketing spend and activities impact your sales growth from month to month or year to year.
Challenges to calculating marketing ROI
A few challenges can make it difficult to accurately calculate marketing ROI.
- Attribution: Attribution assigns credit to a particular marketing channel for a sale. For example, if someone clicks on an ad and makes a purchase, you can attribute the ad to the sale. It’s important to do this, or else you won’t really know which channels are to credit for your success.
- Data: To accurately calculate marketing ROI, you need performance data. This data can be challenging to collect which is why it’s important to use tools, like those we’ve described in this blog, to help you track and measure the right data.
- Multiple touchpoints: If you’re reaching out to potential leads in multiple ways, it’s imperative to track how each method performs so you have a clear understanding of which touchpoints and methods are most effective.
Be wary of these ROI pitfalls
Mistakes are often made when calculating and measuring ROI. Here are some examples focused on the pet-care industry, so you can be sure to avoid them.
- Not tracking the right data: Ensure you're tracking the right data points. Otherwise, you might not be able to accurately calculate your ROI. You might want to track web traffic from pet parents searching for pet-care services. But you would also want to track other data points such as phone calls, emails, or form submissions from those same pet parents.
- Failing to establish a baseline: Without a baseline, it can be difficult to determine whether your marketing efforts are working. For example, you might want to track how many new pet parents you can reach through your marketing campaigns. But if you don't know how many new pet parents you had last month, it can be difficult to track your progress.
- Not nurturing leads: Not every pet parent who visits your website is ready to buy. That's why it's important to nurture your leads with relevant content and follow-up communication. Otherwise, you might lose out on potential customers down the road.
- Tracking too many data points: It can be tempting to track every data point possible when calculating ROI. But this can make it more difficult to identify which marketing efforts are working and which aren't. Instead, stick to tracking the most important data points for your business. This is particularly important for service-based businesses like ours.
- Assuming all pet parents are the same: Not all pet parents are the same. They might have different needs, budgets, or preferences. That's why it's important to segment your leads and create targeted marketing campaigns. Otherwise, you might waste time and money on marketing efforts that don't resonate with your target audience.
Getting started improving your marketing ROI
Setting up marketing campaigns and implementing a digital marketing strategy can skyrocket growth, or it might not. Collecting and analyzing how your tactics are performing is critical to knowing which marketing expenditures are giving you the best return on investment.
Whatever path you choose, remember that numbers are your friends! Taking a measurement of where you were before implementing a new marketing strategy and after will be the key to ensuring you get the most bang for your buck!