You Can’t Be Smart About Marketing If You Don’t Understand Your ROI

A client called me the other day concerned about the amount of money spent on their Pay Per Click campaign last month.  Now this is a great client, one that every agency dreams of.  Good people, listens and acts on suggestions, trusts you and doesn't spend their days looking over your back.  Awesome to work with.

One problem.

No matter how many times we discuss the importance of it, keeping track of their lead sources and ROI on their marketing spend still eludes them.

Now from my end I can track their Pay Per Click spend, their analytics and their goal conversions.  I can see where the contact form leads are coming from (still trying to get them to track phone calls) and where people are spending their time on the site.  I track what I can, but they also do offline advertising that isn't set up for lead tracking (yet).   I also can't track what happens after that initial contact with the company.

This is always a challenge, trying to track the full conversion cycle with offline businesses.  Unless you're given full access to their business, you'll have to rely on them to give you final conversion data.  Sometimes this happens, most often it doesn't or is too vague to quantify.

Looking back at their Pay Per Click numbers last year I saw:

About 70 Pay Per Click leads where generated via their website contact form.

They receive over three times as many phone leads -vs- web form leads.  For this example we'll play conservative and say 100 leads came in via phone calls that originated from Pay Per Click.

They claim their conversion rate is about 50% with leads they follow up with, I think it's actually lower so I'll say 25%.

That leaves us with 170 leads from Pay Per Click.  With a 25% conversion rate, that leaves us with a conservative estimate of 42 deals landed through their Pay Per Click marketing efforts during the year.

Now this is a service company that sells a bigger ticket service.  They say their average sale is over $8K.  I'll round it down to $5K.

42 deals at 5K each is $210,000 in revenue.

They spent a total of $16,000 last year on Pay Per Click marketing.

Yes, you're reading that right.  For every dollar they spent on Pay Per Click marketing, they got over $13 in revenue.  This is a low end estimate.

When you read it that way, you would be willing to spend an unlimited amount of money on Pay Per Click to get those kind of results, wouldn't you?

But when you have no idea what your Return On Investment (ROI) is, you get concerned because you spent just over $1500 in a month and have no way of connecting your revenue to that money spent.

Now this client is great and is slowly moving towards making marketing decisions based on data, not gut feeling.  But how many businesses out there are slowly killing their business with poor marketing decisions?

The data and methods of obtaining it are out there.  It's easy to set up and with a little effort, easy to track.  Take the time to put systems in place to gather the data and then spend all of the time necessary to understand it.  If you do this, you'll be surprised by how efficient you can make your marketing dollars.

 

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Gary

CEO at 3Bug Media
Gary Shouldis is the founder of 3Bug Media, a web marketing company that helps businesses create 360 Marketing Strategies to dominate their market. His blog is read by over 20 thousand small business owners a month and has been featured in the N.Y. Times Small Business, Business Insider and Yahoo Small Business.