There are multiple measures and indicators to pay attention to if you run a business. Monitoring its performance requires keeping your finger on the pulse constantly. You have to cover such topics as sales campaign results, a marketing strategy, and the activity of your target audience, etc. One of the most important indicators is ROI, i.e. return on investment. What is it and how to improve it? We are here to tell you.
The first part of the article provides some basic knowledge about return on investment, its essence, and why it is so crucial. In the next section, you will find some tips for boosting your ROI and keeping it that way. Let’s dive in!
What does ROI mean?
Return on investment indicates the efficiency or profitability of your investment. Efficiency is compared among a number of investment options. ROI attempts to determine how much a particular undertaking has returned relative to its cost. The formula looks as follows:
Simply put, tracking ROI helps you to recognize what pays off for your business. Let’s suppose you invested in several content marketing campaigns. Thanks to following the ROI measure, you will be able to check which one suits your target audience best and brings you more customers at lower costs. You don’t have to buy any advanced analytics tool to check the numbers; all you need is a Google Analytics account and you will find all the necessary information there.
Why is it important to keep your ROI high? The higher the measure is, the less money you are wasting, i.e. your investment is paying off. As a business owner, you probably know that staking money in the wrong investments won’t bring profit, so you should put your resources into investments with strong returns and reduce costs wherever possible.
Boosting ROI: our tips & tricks
#1 Create bonds with your customers
There are no marketing budgets for building customer relationships specifically, but there are ones for referral or loyalty programs. The former allows you to increase conversion rates and CLV at very low costs. Referred customers’ lifetime values can be even 16% higher compared to non-referred ones. It provides a great opportunity to focus on your customer satisfaction and take care of them so that they stay with you for longer. How does a referral program work? Similar to loyalty ones. Your existing clients get rewards in exchange for you acquiring potential new customers. Each of your clients receives a link to share with a group of friends, and every time the referee performs a desired action like registering for a newsletter or purchasing, both parties (or just one, it depends on you) can earn rewards! Referral marketing may be very profitable for your business since it can bring you new customers just for the cost of giving them a discount or free items. Want to give it a try? Register at EarlyParrot and create your program in a flash!
The same rules apply to loyalty programs, but here your customers can, for example, collect stamps and receive a 50% discount after collecting 10 of them. This is one of the most effective strategies for building strong and long-term bonds with your current clients. It is a popular way to do so too, as an Accenture report shows that 90% of brands have a loyalty program or some other form of customer engagement (referrals count here too!).
#2 Reduce abandoned carts
Easier said than done, right? But it isn’t impossible to reduce this number to as low as possible. How to do so? We are here to tell you. First of all, analyze the moment of abandonment, whether it happened at the payment stage or when selecting delivery methods. If so, analyze the options you offer. It is always a good idea to offer more than fewer so that people can choose what they are more comfortable with.
Furthermore, pay attention to your website structure, if users can seamlessly switch between various pages, how the search engine works, and if it is generally bug-free. Your site is one of your marketing channels, too. You can think of it as your company’s business card, so it should run as smoothly as possible. Perhaps a client is still considering a product because there is not enough information about it? You have to be sure that the description includes EVERYTHING that may be in the interest of your clients – sizes, colors, compositions, etc. This is a good place to highlight customer reviews and some user-generated content too, so if your customers send in some pictures with their product reviews then use them! They can be game-changers for indecisive clients.
If a customer simply put items into their basket and left them unpaid for, remind them about stuff waiting in their cart. You can use SMS marketing or even send an email. No matter which marketing channel you use, be polite and make the message encouraging. Moreover, do not send such info straight after the client left your website. Wait a day or two, so that you do not overwhelm them. You can use marketing automation tools to plan such actions, and you can read more about automatization below.
#3 Focus on conversions
Conversion rate is very closely related to ROI. Simply put, the higher your conversion rate is, the greater the chances of improving your ROI. Why are conversions so important in this regard? Well, it depends on what you mean by conversion. Let’s say you invest in social media marketing and set up Facebook ads, then every time users click on them and purchase from your store your conversion rate is boosted and so is your ROI. In other words, the return on your Facebook ads investment increases.
So, how to achieve marketing goals like having a high conversion rate? Let’s stay with the example of social media; your marketing efforts will pay off when you focus on what you publish. Ads are a great option, but social networks are mostly about your feed and what you publish, so concentrate on that. Thanks to social media channels, you can build a community and strengthen bonds with your customers. This will also affect your marketing ROI. Establish your own hashtags, encourage your followers to post about your brands, highlight customers reviews on your profile, and reward user-generated content. The latter provides social proof that your product works and is worth a client’s money. Such aspects are crucial for potential first-time buyers and can be the final trigger to purchase.
#4 Automate your processes
By automating your processes, you can make them more efficient and improve your workflow significantly. There are lots of tools supporting this aspect. Email and social media marketing autoresponders are the most popular, but you can automate basically every part of your strategy – from the very first step of the marketing funnel until you send a “Thank You” email.
For example, suppose we have encouraged you to implement referral marketing with EarlyParrot. In this case, you can design templates of your default emails and allow the tool to communicate with your clients on your behalf. Our tool can say “congratulations” when they earn a reward or “welcome” to new referred customers. It makes communication quicker and more efficient. Such processes handle repetitive actions for you and allow you to focus on more crucial aspects.
Keep in mind that investing in digital marketing should go hand in hand with automation tools if you are to make the most of it.
#5 Implement testing
Efficiency demands testing, so provide it! If you want to stay up-to-date with what is going on with your strategy and whether there is progress or not, you should follow KPIs and check out alternatives! It can always be better, so it’s worth trying.
How to check what would work best for your business? A/B testing comes in handy. It is a way of comparing various marketing methods or elements and checking which one works better for your business. Through this approach, you will be able to identify the weak points of your strategy and come up with something different! How to run such tests? Because it’s not rocket science, you won’t need to hire a team of specialists to manage it. Depending on the market you operate in, the niche you’ve selected, and a few more aspects, the complexity and direction of your tests may be different, but here are a few things you might want to consider:
- landing page copy
- website layout
- website architecture and navigation
Checking the above elements will give you a big advantage over your competitors and make you stand out. When testing, don’t check too many different elements simultaneously, as this will make it impossible to determine which one caused specific changes.
Once you recognize what works the best for your enterprise, you will be able to increase your income and so your ROI will rise too.
#6 Use various platforms
To increase earnings and thus take care of your ROI, you should be in touch with your audience around the clock and try to stay in their minds as long as you can. As we mentioned at the very beginning of this article, communication and bonds with your customers are very important. The same rules apply to awareness; you need to stay at the forefront of their minds. For this to happen, you should be present on a variety of channels and not focus only on one method of communication. Use social media, emails, chats, and IVRs. In order to satisfy your customers’ needs and remain in their minds, you must work from all angles.
To be clear, we are not discussing marketing alone here but the overall performance of your business. Take care of the user experience, customer service, and post-purchase services, etc. Be present at industry events and let people get to know you better there. Differ your distribution channels and put yourself out there. The key is to focus on delivering high quality via various channels and be open. This way, you will maximize your chances of higher income.
Start increasing your ROI now!
Making your ROI high is not the simplest task, but it might not be as hard as you think it is if you focus on the goal. And it is almost a piece of cake if you follow our tips!
Increasing your ROI means increasing your income, but you shouldn’t put the money aspect first all the time. What or rather who should come first are your customers, both existing and potential ones. That is because happy customers are the ones who spend the most money on your items. Keep them satisfied in the first place so that you can meet their needs and deliver high-quality services. Increasing your return on investment will follow as a result.