So last week I raised the fairly controversial topic of measuring ROI within a business that has no fully implemented, integrated CRM system. I concluded with the point that, even with all of the metrics afforded to a digital marketer, these had little value unless we had an idea of what a “conversion” was worth to the business, be it an order, an enquiry or other engagement.
To calculate the value of engagement is often a “how longs a piece of string?” Type question, even with a CRM as it can’t be measured by any hard-and-fast metric. We can make an educated guess at how interested our audience is based on visits, how many times the same people return to the site, how many clicks we get from an email marketing campaign, how “likes” we get from a social media marketing campaign, and so on. These are merely indicators and don’t necessarily correlate well to the bottom line or real life sales or orders. That said we can use a combination of these metrics and the business’ average order value to get a pretty good idea of How much a website visitor is really worth to you?.
For this calculation we need to know only a few bits of data that should be fairly easy to obtain:
- Number of Visitors to the website
- Percentage of visitors that become leads
- Percentage of leads that convert to orders
- Average order value
Depending on the nature of the business, the visitors metric may be Unique Visitors or could be Visits total, it depends whether its important if they are new or returning visitors to the business model.
If we take a basic example where we assume 10% of visits “convert” into leads, i.e. 10% of visitors to the website go on to submit an enquiry, be it by phone, email or other. Then out of those 10% of enquiries, a further 10% actually place an order (1% of website visitors) we can plug in some numbers and get a meaningful method for calculating ROI, at least on Digital Marketing.
These arbitrary 10% values would need to come from your own experience of the business model or any results you already have. Realistically 1% of website visitors placing an order should be enough to pay for the costs of it at least and probably most of the marketing put into it.
|Visitors||Leads||Orders||Avg. Order Value||Value|
The above example illustrates the formula quite nicely, in this case it’s for a large B2B tech company or similar where order values are high but you get the idea. Given the average order value within a business and an idea of how many visitors you convert into orders you can quite easily calculate some level of ROI for most marketing activity.
With all these metrics flying around though, are marketers in danger of losing their creativity and suffering from performance anxiety?…