Great business professionals know that marketing is more than a necessary evil. It’s a meaningful way to connect with customers, build relationships, and ultimately generate revenue. But for marketing to be truly effective, it must be strategic.
While diving into analytics and coming up with new marketing strategies can be daunting, the value of a well-executed marketing campaign is clear: a higher return on investment (ROI).
Instead of going through the motions with your marketing and hoping for the best, use these three principles to increase your marketing ROI:
1. Reduce Costs
Cutting down on unnecessary marketing costs is a great way to increase ROI. Evaluate your current campaigns and identify areas where you can cut costs without compromising results.
For example, if you’re running a print ad campaign, consider reducing the number of ads you run or the frequency with which they appear.
Although it may seem counterintuitive, reducing your marketing budget can actually help you boost ROI by allowing you to focus on a smaller number of higher-quality campaigns.
Let’s explore a few other ways you can reduce marketing costs:
New channels
Not all channels are created equal. Even if a particular channel has worked well for you in the past, it may not be the most cost-effective option anymore.
With the ever-changing marketing landscape, it’s important to regularly evaluate which channels are most likely to reach your target audience at the lowest cost.
A few things to consider include:
- Newer channels tend to be less expensive than established ones. Consider advertising on newer platforms like Snapchat or TikTok.
- Some channels might be more appropriate for certain types of campaigns than others. For example, LinkedIn is great for B2B campaigns, while Instagram works well for B2C campaigns.
- Some channels might be more expensive in specific industries than others. For example, TV advertising tends to be more costly for consumer goods than for B2B services.
Creating a solid mix of channels is key to reaching your target audience without breaking the bank.
Outsourcing
One way to reduce marketing costs is to outsource certain tasks or campaigns. This can be especially helpful if you don’t have the in-house resources to handle a particular project.
When outsourcing, be sure to:
- Research potential vendors thoroughly. Ensure they have a good track record and that their values align with yours.
- Get everything in writing. This includes the scope of work, timeline, and budget.
- Create a system for tracking progress and results. This will help you hold your vendor accountable and ensure that the project is on track.
By outsourcing, you can focus your in-house resources on more strategic tasks while still getting the high-quality results you need to boost ROI.
Six sigma
Six Sigma is a quality control method that you can use to reduce defects in any process, including marketing. Six Sigma is all about efficiency and eliminating waste, so it’s a great way to improve ROI.
There are two main ways to use Six Sigma in marketing:
- DMAIC: This is the standard Six Sigma methodology for Define, Measure, Analyze, Improve, Control.
- DMADV: This is the Six Sigma methodology for designing new products or processes and stands for Define, Measure, Analyze, Design, Verify.
DMAIC and DMADV can be used to improve the effectiveness of marketing campaigns and ultimately boost ROI.
For instance, let’s say you’re planning a direct mail campaign. Using the DMAIC methodology, you would first define the campaign’s goals.
Then, you would measure things like the response rate and conversion rate.
Next, you would analyze the data to identify any areas of improvement.
Finally, you would implement changes to improve the campaign results and implement controls to ensure the improvements are sustainable.
You can streamline your marketing efforts using Six Sigma and eliminate waste, resulting in a higher ROI.
Marketing automation
Many marketers see automation as an expense, but it can be a great way to save money. Automation can help you streamline your marketing efforts and free up your time so you can focus on more strategic tasks.
A classic HBR study suggests that companies can automate 3 out of 10 tasks. But that figure was calculated in 2015, so the actual number is probably even higher today.
Marketing Automation tools:
Analyze your process maps, looking for areas where you can use automation. Common examples include:
- Lead capturing
- Lead nurturing
- Customer service
Reducing manual labor in these areas can help you save time and money, ultimately leading to a higher ROI.
2. Increase Conversions
Conversion rate is the percentage of people who take the desired action, such as making a purchase or signing up for a newsletter. If you can increase your conversion rate, you’ll see a corresponding increase in ROI.
For example, imagine you’re running a direct mail campaign. If your conversion rate is 2%, two out of every 100 people who receive your mailer will take the desired action. But if you can increase your conversion rate to 4%, you’ll double the number of people taking action. And that means you’ll also double your ROI.
So how can you increase conversions? Here are a few ideas:
Read your metrics
Math is the language of business, so you need to be fluent in it if you want to increase ROI. That starts with understanding your key metrics and using them to make informed decisions.
For example, if you’re running a campaign on TikTok, you’ll want to track metrics like views, likes, comments, and shares.
But you’ll also want to look at less obvious metrics, such as completion rate (the percentage of people who watch your video to the end) and engagement rate (the percentage of people who interact with your video).
Understanding which metrics are most important for your campaign can optimize your content and strategies to boost ROI.
Besides, reading your metrics will reveal areas where you can improve. For example, if your completion rate is low, that’s a sign that people are losing interest in your videos. You can then take steps to improve the quality of your content so that people will stick around until the end.
Segment and personalize
The benefits of segmenting and personalizing your marketing campaigns are vast and well-documented. In fact, a study by KOMarketing found that segmented and personalized campaigns can generate 2x more revenue than generic campaigns.
Consumers also prefer personalized content. 75% say they’re more likely to do business with a company that offers personalized experiences.
So how can you segment and personalize your marketing campaigns? Here are a few ideas:
- Use data from past interactions to segment your audience. For example, you might segment your email list by buyers and non-buyers.
- Create different messages for each segment. For example, people who haven’t made a purchase might get a discount offer, while those who have might get a coupon for free shipping.
- Use data from past interactions to personalize your messages. For example, you might include the product someone purchased in an abandoned cart email.
- Personalize what matters. There’s a fine line between being helpful and being creepy. 41% of consumers say they’re uncomfortable with how much brands know about them. So ensure you’re only including information that’s truly relevant and useful to the person receiving it.
Recommended: Why should you Segment your List?
A/B testing
Sometimes, the only way to increase conversions continuously is through standardized testing. Testing removes the guesswork from the marketing process, so you can quickly and easily find out what’s working and isn’t.
A/B testing, or split testing, is the process of comparing two versions of a piece of content to see which one performs better. The most common type of A/B test is an email A/B test, but you can also A/B test everything from ads to web pages.
99firms suggests that 50% of companies use A/B testing to improve their conversion rates. And it’s easy to see why: when done correctly, A/B testing can significantly impact ROI. For example, Bing reported a 25% increase in ad revenue after A/B testing display ads.
To implement A/B testing in your marketing campaigns, start by identifying which elements you want to test. For example, you might test the headline of an email or the call-to-action on an ad. Then, create two versions of each element and track the results to see which performs better.
Keep in mind that A/B testing takes time and effort to do correctly. But it’s worth it: by continuously testing and tweaking your campaigns, you can gradually increase your ROI.
3. Increase AOV
OV, or average order value, is the average amount spent per order. Increasing AOV will naturally increase your ROI since you’ll make more money per sale.
There are a few different ways to increase AOV.
Let’s explore some methods:
Upselling and cross-selling
The almost proverbial example of McDonald’s “do you want fries with that?” is one of the most famous (and practical) examples of upselling.
Upselling is when you encourage a customer to buy a more expensive version of the product they were initially going to purchase. Cross-selling is when you encourage a customer to buy a related product.
For example, let’s say someone is buying a gardening course. An upsell might be a more expensive course on gardening, while a cross-sell might be a book on gardening.
Upselling and cross-selling can be effective because they’re based on the idea of customer lifecycle marketing. In other words, you’re not just selling a product; you’re selling a solution that meets your customer’s needs.
Rise pricing using the price corridor of the mass
In Blue Oceans Strategy, W. Chan Kim and Renée Mauborgne introduce the concept of “the price corridor of the mass,” which defines the upper and lower limits of what people are willing to pay for a product.
For example, let’s say you’re selling a pair of jeans. The lower limit might be $20, while the upper limit might be $100. If you’re currently selling your jeans for $50, you have some room to increase your prices.
Of course, you don’t want to increase your prices too much, or you’ll risk losing customers. But if you can find the sweet spot within the price corridor of the mass, you can increase your AOV without sacrificing sales.
Retargeting
Although retargeting involves additional spending, it can be a highly effective way to increase AOV.
“Retargeting” refers to showing ads to people who have already visited your website. These ads can be highly effective because they’re targeted at people who are already interested in your products or services.
For example, let’s say someone visits your website but doesn’t buy anything. With retargeting, you can show those visitors ads for the products they were looking at, which might encourage them to return and make a purchase.
Retargeting can still be effective even if they already bought something from you. For example, you could show them ads for related products they might be interested in.
Ready To Boost Your ROI?
Increasing your ROI is sometimes a life-or-death issue for your business. Hopefully, this article has given you some ideas on how to do it.
Remember, there’s no one-size-fits-all solution. The best way to increase ROI is to experiment and find what works for you.
Ultimately, the most important thing is to focus on your customers and give them what they want. If you can do that, you’ll be well on increasing your ROI.