Whenever you invest any amount of money in your business, do you track and measure the effectiveness of the investment?
I am hoping you said “yes” because tracking the effectiveness of your investment, or the Return On your Investment (ROI), is extremely valuable regardless of the size of your business or the size of the investment.
Why? ROI is a Key Performance Indicator (KPI) that is used to determine the profitability of the product or service that was invested in. It’s also useful for tracking the level of success each investment has so future purchasing and business decisions are easier to make.
Basically, it lets you know if you’re getting your money’s worth out of the things you are spending money on and if it’s worth it to repeat the purchase, again.
ROI can be used in any and every aspect of your business where money is spent or invested in your company (HR, Sales, Marketing, Website, Content, Social Media, etc.). In terms of marketing ROI, calculating your return on each campaign gives you a better understanding of how well your campaigns are doing and also has the ability to help show you the areas that need improvement in order to achieve your goals.
For example, if you purchased branded items with your logo to be used as a random giveaway, it would be hard to track ROI because there is not a strategy or a method to back up the investment.
On the other hand, if you had a strategy – complete with a message and a call to action to drive traffic to your website, landing page or place of business – you would be able to analyze the inbound leads and sales and from there. Then, you can calculate ROI to see how effective the campaign is.
From there, you can gauge the response and see what’s working and what’s not. Once you decide what needs to be added, subtracted and adjusted, you can take that data and base your next program off of what worked well previously.
As you can see, tracking ROI helps you make better, well informed, business decisions that give you insights on where to spend your money, how to pivot in your strategy and discover which tools are necessary for a successful campaign.
If you are not currently tracking ROI, what are you waiting for? Once you stop winging it, you will feel a lot better because you will end up feeling more confident making decisions about the money you spend when it comes time to investing in your business.