Internet Marketing ROI Measures

by Guest Blogger Andy Moysenko of Advyse.

Return on investment (ROI) is one of the most important measures to a business. Whether the enterprise is growing, holding its own, or declining, meaningful ROI data on its expenditures, particularly in marketing is critical to managing the business. And, in the digital age, identifying the return on expenditures in specific marketing measures can be the key to improved revenue and profitability. The flexibility of customer access, however, can make it difficult to attribute returns to specific internet marketing measures. In this short piece, we’ll take a high level look at this issue.

We’ll consider the case of measuring the impact of different marketing approaches on sales. In particular, we’ll focus on teasing out the contributions of the internet based approaches. Because of the inherently “anonymizing” effect of prospect and customer entry through a basic website, the issue can quickly become formidable.

We begin to gain some insight into the complexity of the issue with a simple conceptual network flow diagram (see below).

ROI-MEASURES_Graphic_040416b

 

Beginning at the left of the diagram, we start with the customers (always a good start), and Sales is on the far right. The customers become connected with sales by either accessing the website, through a variety of paths, or by some non-internet path. The non-internet path might be walking into the sales office or placing an order directly with a sales person or customer service person. Note that at the top of the diagram, there are return paths from sales to the customers. These might be brochures, proposals, etc. or actual products and/or services.

If we look at the paths from customers to the website, we notice that the upper two paths are ‘simple’ internet paths. It may not be 100%, but it would be a good approximation for the fraction of customers that start with links from other sites (strategic partners, distributors, etc.) or search engines and go directly through to the website. The lower paths may result in a website entry, or they may lead to customers pursuing non-internet channels (sales personnel, etc.). There may be additional paths not illustrated here, but they will follow the same general principles.

When a prospect or customer enters the company website for the first time, it is a pretty much ‘anonymous’ event. Identifying methods such as requiring an e-mail address or sign up to obtain a white paper are often used. This can result in a prospect deciding that it is not worth the trouble and moving on. And, despite the straightforward appeal, the “where did you hear about us” block looks great but is probably less than 50% reliable. Any of these contrivances have the potential of being more misleading than helpful in evaluating the value of different marketing paths.

So, what can we do? First, consider setting up different landing pages for each internet path. They can all look like the homepage, but have slightly different URL’s. One URL might be used for trade shows (or different ones for different trade shows), for direct sales initial contact, etc. Your visit counts would then indicate the traffic generated through each path.

If there were some way of establishing a “prospect number” for each person visiting the website, then this could be used to track subsequent sales. The landing page data would show the path and subsequent sales data would show the sales generated for the specific customer. If the IP address of the website visitor can be captured, this may be used to establish an initial prospect number. It is true that customers may end up communicating from different IP addresses, but that may only be a small aberration. Also, once the sales process starts, a unique identity is usually established for the customer (e-mail address, etc.).

To conclude, our digital world opens up the number of channels for sales prospect and customer communications. It is important to recognize, however, that this does create a very complex network when we attempt to couple this ‘free flow’ into the domain of business management. A graphical representation of the issue is invaluable in gaining insight into how things are really connected. And, finally, there are mechanisms in website engineering and statistics that can begin to unravel the knot and unveil accurate, reliable data for marketing ROI calculations.