ROI simply describes the percent of profits that you made from an investment. For instance, if you profited by $10 for every $100 that you spent on marketing, your ROI would equal 10 percent. While corporate marketers may view these as decent returns, smaller companies usually hope to work towards an ROI of at least 15 percent. Since small companies have fewer assets to rely upon, they need to drive more profits with any investment. Still, any positive ROI is usually a good ROI because it gives you the funds to keep improving.
Five Tips to Maximize Your Marketing ROI
As with any other business endeavor, you've got to reduce the investment that you need to make to earn profits if you hope to increase your ROI. This may not mean that you should spend less on marketing, but that you should try to squeeze more profits out of the time and money that you do spend. Of course, if you can achieve good returns, you may want to increase your marketing budget to help grow your business faster.
Consider some tips that will help you enjoy greater returns while reducing your marketing expenses.
1. Sometimes You Just Need to Increase Your Profits
You have two options to increase your earnings. You can either improve profits or decrease spending. In many cases, you can only decrease your marketing budget so much before your frugality starts to work against you. Most small business marketers would prefer to use their money as efficiently as possible, but they find that they can help grow their businesses by maximizing profits and not by concentrating on cutting expenses.
Your solution comes from spending money in the right place and knowing where that is. Once you have uncovered your most profitable marketing channels and types of ads or content, you will find that additional spends can dramatically increase your income.
2. Learn to Use the Right Measures of Success
Commonly, small business owners don't even know how much they spend to obtain a lead or attract a new customer. They just look at their overall marketing budget as some percentage of their revenues. You can use commonly available and even free analytics tools to learn which of your activities are driving visitors to your business site and converting those visitors into prospects and new customers.
When you have this information, you can make good decisions about which marketing channels work the best for you and which ones you either need to improve or abandon. If you don't know which social sites, paid ads, or content tends to attract customers, you will always waste money. Since you can use a sophisticated tool like Google Analytics for free, you really can't make excuses for failing to track your visitors and conversions.
3. Consider Increasing Prices
If you want to sell more, you might think that increasing prices is poor advice. Are you certain that your customers only base their purchasing decisions upon price? Perhaps they also value customer service, quality, or the fact that your company gives employees time off to volunteer for worthy causes.
You could try to survey your existing customers to find out what they like and dislike about your company and your competitors. Like Apple or Rolex, you may find that you can make more money if you position yourself at the top of the market and not the bottom.
4. Carefully Define Your Small Business Goals
If you're running a startup, you probably want to generate revenue as quickly as possible. Still, you may also need to focus on brand or produce awareness before you can effectively attract more customers. Either way, you can better define your marketing and your measures of success if you craft them to support focused business goals.
You can also come up with unique solutions to any obstacles you may face. For instance, if you need to generate revenues and improve brand awareness quickly, you might consider offering a minimum viable product to your customers. Once you begin to generate revenue and feedback, you can add in additional features to market as an upgrade.
5. Test, Experiment, and Analyze
Would a shorter video attract more visitors to your website than a longer one? Which benefits and features should you emphasize in your paid advertising, social posts, and website content? You may need to run some experiments and A/B tests to learn which kinds of ads and content can attract consumers and then engage them enough to turn them into customers.
Also, you should spend time learning which marketing channels produce the best results for you. For instance, if you are using paid search ads and email, you might try text messaging, distributing a free app, or placing your ads on relevant websites. Maybe you should implement a referral or loyalty program to increase the lifetime value of each customer. You may believe that you have tried a lot of different kinds of marketing, but you can always uncover more.
Increase Your Marketing ROI by Spending Money Where It Makes Money
In addition to the five tips listed above, you might consider leveraging more marketing automation to improve your efficiency. This kind of software can take the drudgery out of many tasks and also help you keep better track of your marketing metrics. If you have to pay for new tools that can help you discover how to earn more money, you should consider that a sound investment.
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