{"id":13770,"date":"2014-03-05T08:30:58","date_gmt":"2014-03-05T14:30:58","guid":{"rendered":"https:\/\/crazyeggblog.wpengine.com\/?p=13770"},"modified":"2018-02-14T18:19:52","modified_gmt":"2018-02-15T00:19:52","slug":"measure-marketing-roi","status":"publish","type":"post","link":"https:\/\/www.crazyegg.com\/blog\/measure-marketing-roi\/","title":{"rendered":"Measure Marketing ROI: Proving Value When It Can&#8217;t Be Measured"},"content":{"rendered":"<p>What happens when a marketing campaign\u00a0<em>can&#8217;t<\/em> be measured?<\/p>\n<p>Do you go about business as usual, cranking out campaigns willy-nilly? Do you sidestep questions about metrics, mumbling something about ROI under your breath?<\/p>\n<p>A few years ago, we struggled with new marketing channels that were virtually impossible to measure. Today, things are different. Let&#8217;s look at 5 ways you can measure marketing ROI\u2014even those hard-to-measure marketing campaigns.<\/p>\n<h2>What You Can&#8217;t Measure on a Company Dashboard<\/h2>\n<p>You can\u2019t split test your social media marketing strategy. You can\u2019t run a controlled experiment to see whether your SEO strategy is really responsible for that growth in traffic.<\/p>\n<p>It\u2019s hard to justify your efforts when your results can\u2019t be measured directly.<\/p>\n<p>Hard, but not impossible.<\/p>\n<p>Estimates and correlations might not count as <i>proof<\/i> of ROI, but when you tie your strategy to numbers, your actions become harder to ignore. What was once an unexplained fluctuation in revenue is now tied to your actions behind the scenes.<\/p>\n<p>Just as importantly, these estimates and models start to tell you which elements of your strategy are most effective, and which elements should either be improved upon or let go.<\/p>\n<p>So, how do you measure the impossible?<\/p>\n<p><a href=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/counting-grains-of-sand.jpg\"><img decoding=\"async\" width=\"570\" height=\"379\" class=\"aligncenter size-full wp-image-13779\" src=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/counting-grains-of-sand.jpg\" alt=\"measuring the impossible\" srcset=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/counting-grains-of-sand.jpg 570w, https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/counting-grains-of-sand-300x199.jpg 300w\" sizes=\"(max-width: 570px) 100vw, 570px\" \/><\/a><\/p>\n<p><span style=\"line-height: 1.5em;\">Focus on these five criteria, and you&#8217;ll know exactly what&#8217;s working and what isn&#8217;t.<\/span><\/p>\n<h2>1. Keeping it Simple: Money in, Money Out<\/h2>\n<p>Before we dive into this a bit more, I\u2019d like to stress this point. No matter what methods you\u2019re using to estimate value, you want to keep the surface level explanation as simple as possible. Fundamentally, you\u2019re really trying to understand just three things:<\/p>\n<ul>\n<li>A clear definition of the strategy in question, so that it can be repeated.<\/li>\n<li>The financial cost of putting the strategy in place.<\/li>\n<li>The financial gain as a result of the strategy.<\/li>\n<\/ul>\n<p>I know this sounds incredibly obvious, and it certainly should be, but these things have a tendency to get bogged down in details. No matter how many metrics end up playing a part in your model, you can\u2019t lose sight of the big picture. This is about defining a repeatable strategy and measuring its financial value.<\/p>\n<p>Nothing more, nothing less.<\/p>\n<h2>2. Defining a Strategy<\/h2>\n<p>If measurement has only one benefit, it\u2019s this. You can\u2019t measure the impact of a strategy without clearly defining what it <i>is. <\/i>I\u2019m <b><i>not<\/i><\/b><i> <\/i>arguing that you need to micromanage every aspect of your campaign. I\u2019m simply arguing that you need to clearly understand what it is you\u2019re trying to do, and how you\u2019re planning to enforce it.<\/p>\n<p>You could just as easily test a looser strategy as a stricter one. You just need to define what you actually <i>mean <\/i>by \u201cloose.\u201d<\/p>\n<p>Definition is important because, without it, you can\u2019t really claim that you\u2019re trying anything <i>new<\/i>. You can experiment and approach your strategy creatively, but if you don\u2019t announce and measure the impact of those changes, you will never be able to separate them from the noise.<\/p>\n<p>You might be able to look backward and justify your actions, but then you\u2019re just playing Captain Hindsight, and you\u2019re going to pick and choose what worked and what didn\u2019t based on your own biases. This might help you get buy-in in some circumstances, but your justifications aren\u2019t quite as trustworthy.<\/p>\n<p><a href=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/captain-hindsight.jpg\"><img decoding=\"async\" width=\"480\" height=\"360\" class=\"aligncenter size-full wp-image-13773\" src=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/captain-hindsight.jpg\" alt=\"captain hindsight\" srcset=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/captain-hindsight.jpg 480w, https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/captain-hindsight-300x225.jpg 300w\" sizes=\"(max-width: 480px) 100vw, 480px\" \/><\/a><\/p>\n<p>More importantly, your assumptions about what worked may not be tied to reality, and this will hinder your performance.<\/p>\n<p>Precisely <i>how <\/i>you define your strategy is a cultural decision. It\u2019s going to depend on your internal bureaucracy, stakeholder expectations, and personal preferences. The important thing is that everybody can agree on the language, and that the definition isn\u2019t so wishy-washy that it could apply to virtually anything you do.<\/p>\n<p>Want a few ideas? This article gives you 8 ways to improve your campaigns.<\/p>\n<h2>3. Measuring the Cost of Your Strategy (Up Front)<\/h2>\n<p>It\u2019s relatively simple to measure the cost of a strategy in terms of actual dollars spent, and hours involved, especially if you\u2019re talking about the cost <i>after <\/i>the fact. A much peskier problem is the question of opportunity cost.<\/p>\n<p>If you\u2019re going to ask for resources, it\u2019s not enough to be able to promise that a positive ROI is the most likely outcome. You need to be able to demonstrate that the ROI is going to be <i>higher <\/i>than if those resources were invested <i>elsewhere<\/i>.<\/p>\n<p>Put another way, when you estimate the cost of your strategy, you need to think about where those resources are <i>coming <\/i>from.<\/p>\n<p>This is an important part of your justification, but it often goes completely forgotten. Whether you\u2019re an agency trying to sell your services, or a middle manager trying to get a piece of the marketing budget, you need to take this opportunity cost into account.<\/p>\n<p>Of course, you\u2019ll want to be as clear as possible about how you got those estimates. Demonstrate that your competitors are completely ignoring opportunity cost, and that you\u2019re putting it front and center. That will get you taken seriously.<\/p>\n<p>Otherwise, it just looks like your strategy is the most expensive option.<\/p>\n<h2>4. Separating the Signal from the Noise<\/h2>\n<p>This is the part that most strategists just like to skip over.\u00a0Digital marketers are often especially bad with this one.<\/p>\n<p>They point to an inflation in traffic without making any quantitative effort to tie that growth to their actions, or to tie it directly to revenue. They just assume that executives and clients will gladly accept their assumptions that they are the ones responsible for the growth, and that this growth can actually be tied to revenue.<\/p>\n<p>To be fair, this isn\u2019t entirely the strategist\u2019s fault. They rarely have any easy access to data regarding what else the company might be doing to inflate traffic, or to the financial value of that traffic.<\/p>\n<p>That said, the strategist should at least make an effort to get their hands on this data.<\/p>\n<p>Once you have that data, you need to think a bit deeper than the surface level metrics. I\u2019m talking about:<\/p>\n<ul>\n<li><strong>Control variables.<\/strong> What else is influencing traffic and revenue? You want to include as many of these as possible in your model. The more control variables you can account for, the surer you can be that <i>you <\/i>are responsible for the financial gains.<\/li>\n<li><strong>Cohorts analysis.<\/strong> This is where \u201cdifficult to measure\u201d marketing strategies really start to shine. Much of social media, content, and inbound marketing is focused on customer retention and lifetime value. Using cohort analysis, you can demonstrate that your strategies are creating more lifetime value than the typical site visitor.<\/li>\n<li><strong>First-touch attribution.<\/strong> To the extent that it\u2019s possible, you want to be able to track individual customers back before they created their accounts to the initial referral source, and any content they\u2019ve interacted with along the way, as well as any smaller actions they\u2019ve taken.<\/li>\n<\/ul>\n<p>Odds are good no third party dashboard is going to give you this information on a daily basis without some customization. No matter how good your tool, you are going to need to personalize it for your business.<\/p>\n<p>If your budget is limited, I highly recommend <a href=\"https:\/\/www.cyfe.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Cyfe<\/a>, a relatively inexpensive dashboard, with a free version available. It\u2019s easy to customize and can run off of dynamic (or static) CSV files. (They have an API as well.)<\/p>\n<p><a href=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/cyfe.png\"><img decoding=\"async\" width=\"642\" height=\"389\" class=\"aligncenter size-full wp-image-13774\" src=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/cyfe.png\" alt=\"cyfe\" srcset=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/cyfe.png 642w, https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/cyfe-300x181.png 300w\" sizes=\"(max-width: 642px) 100vw, 642px\" \/><\/a><\/p>\n<p>For more personal tracking and a higher budget, <a href=\"https:\/\/www.kissmetrics.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">KISSmetrics<\/a> is one of our favorites. Integrated with Cyfe it\u2019s even more useful.<\/p>\n<p><a href=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/kissmetrics.png\"><img decoding=\"async\" width=\"730\" height=\"230\" class=\"aligncenter size-full wp-image-13775\" src=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/kissmetrics.png\" alt=\"kissmetrics\" srcset=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/kissmetrics.png 730w, https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/kissmetrics-300x94.png 300w\" sizes=\"(max-width: 730px) 100vw, 730px\" \/><\/a><\/p>\n<h2>5. Reporting<\/h2>\n<p>It\u2019s important to remember that reporting needs to accomplish three basic things:<\/p>\n<ul>\n<li>Clarify what has been factored into your model<\/li>\n<li>Demonstrate ROI (or lack of it) based on the model<\/li>\n<li>Offer actionable takeaways<\/li>\n<\/ul>\n<p>And, of course, it needs to accomplish all of this without putting anybody to sleep.<\/p>\n<p>All too often, strategists will just post a few time series charts of traffic, revenue, or Facebook Likes, and call it a report.<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/metrics.png\"><img decoding=\"async\" width=\"979\" height=\"562\" class=\"aligncenter size-full wp-image-13776\" src=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/metrics.png\" alt=\"metrics\" srcset=\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/metrics.png 979w, https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/02\/metrics-300x172.png 300w\" sizes=\"(max-width: 979px) 100vw, 979px\" \/><\/a><br \/>\n<em>A chart is not a report.<\/em><\/p>\n<p>This is <i>not<\/i> a report. It\u2019s raw data. It doesn\u2019t prove that you made anybody any money. It just proves that some things happened.<\/p>\n<p><i>Yes, even if it\u2019s a revenue chart.<\/i><\/p>\n<p>While you\u2019re probably going to get some nod-offs if you explain in-depth how your regression model works and what statistical tests you used to compare cohorts, you want to make it clear that your numbers aren\u2019t coming out of thin air.<\/p>\n<p>If somebody objects that you weren\u2019t responsible for this revenue, you want to be able to explain that you already accounted for the revenue created by their AdWords campaign.<\/p>\n<p>A mathematical correlation between the resources you were given and the revenue they earned is always going to be a bit fuzzy, and stakeholders will be understandably skeptical. You want to make this as concrete as possible for them by pointing to things like:<\/p>\n<ul>\n<li>The average lifetime value of visitors referred from social networks, <i>compared to the cost<\/i><\/li>\n<li>The average lifetime value of an email subscriber<\/li>\n<li>The financial value of customers who visited the blog, versus those who didn\u2019t<\/li>\n<li>The value of visitors referred from guest posts, compared to those referred from AdWords<\/li>\n<\/ul>\n<p>It\u2019s important to understand what these figures are for. Figures like these <i>don\u2019t<\/i> really help you understand the big picture. Instead, they clarify <i>how <\/i>the actions you take are making money for your clients\/stakeholders. This does a lot to eliminate skepticism.<\/p>\n<p>All of this only becomes <i>more <\/i>important if you <i>fail<\/i> to show a positive ROI. These details point to what went wrong, and more importantly, the fact that you <i>know <\/i>what went wrong. Your stakeholders will be able to see the parts of your strategy that <i>are <\/i>working, and they\u2019ll be more likely to trust you to revise your strategy effectively to focus on those key elements.<\/p>\n<p>Most entrepreneurs and executives are more aware of the long-term elements of strategy than we give them credit for. They are well aware that some successful strategies will lose money before they make it. Their skepticism isn\u2019t driven by failing to understand this. It\u2019s driven by a lack of concrete information, and the resulting impression that other strategies will probably pay off sooner.<\/p>\n<p><b>The actionable takeaways are the most important part of the report.<\/b><\/p>\n<p>There is a growing belief in business that the purpose of measurement is to <i>justify<\/i> projects and investments. It isn\u2019t. The purpose of measurement is to <i>understand<\/i> projects and investments.<\/p>\n<p>Then, we use that understanding to take <i>action<\/i>.<\/p>\n<p>What are you doing to <i>do <\/i>with this information? This is what people really want to hear. As humans, actions interest us. Data doesn\u2019t.<\/p>\n<h2>The Bottom\u00a0Line<\/h2>\n<p>When measuring the impossible, always tie your strategy to numbers. Especially business outcomes such as leads, sales and profits. Therein lies the true value of everything you do.<\/p>\n<p>So you can&#8217;t measure it on a dashboard! Focus on the five approaches we cover here, and you&#8217;ll have the numbers you need to prove ROI.<\/p>\n<p style=\"text-align: center;\">Check out other <a href=\"https:\/\/www.crazyegg.com\/blog\/author\/pratik-Dholakiya\/\" target=\"_blank\" rel=\"noopener noreferrer\">Crazy Egg articles by Pratik\u00a0Dholakiya<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What happens when a marketing campaign\u00a0can&#8217;t be measured? Do you go about business as usual, cranking out campaigns willy-nilly? Do you sidestep questions about metrics,&#8230;<\/p>\n","protected":false},"author":89,"featured_media":13779,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_lmt_disableupdate":"","_lmt_disable":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[3],"tags":[],"class_list":["post-13770","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Measure Marketing ROI: Proving Value When It Can&#039;t Be Measured<\/title>\n<meta name=\"description\" content=\"How do you measure marketing ROI when you have no metrics? 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