Three ways to increase ROI from your marketing campaigns

You increase the ROI of a marketing campaign in three ways: spend less to get the same result, convert more of the people you already reach, or earn more from every customer you win. Before you change anything, measure ROI properly, so you know which of the three levers will move it most.

How do you measure marketing ROI?

The standard measure is return on marketing investment (ROMI):

ROMI = (incremental revenue from marketing x contribution margin - marketing spend) / marketing spend

Say you spend 100,000 on a campaign that brings in 500,000 of extra revenue at a 60% contribution margin. That is 300,000 in margin. Subtract the 100,000 spend and divide by 100,000, and your ROMI is 2.0.

Two things make this harder than it looks:

• Incremental is not the same as attributed. Attribution tools give a campaign credit for every sale it touched, including sales that would have happened anyway. Incremental revenue is only the extra revenue the campaign caused. You measure it by comparing a group that saw the campaign with a control group that did not.
• Short-term and long-term effects differ. A test shows the lift over weeks. Brand campaigns pay back over months or years, which is why many teams combine experiments with marketing mix modelling.

Agree on one formula and one time window with finance before you start. For account-based campaigns, see how to determine the ROI of account-based marketing.

1. Reduce costs

Cutting waste is often the quickest win, because every euro you stop spending on a weak campaign raises ROI straight away.

Review your channel mix

A channel that worked three years ago may not be the cheapest way to reach your buyers today. For each channel, compare cost per lead, cost per opportunity and customer acquisition cost, not just clicks or impressions. Then move budget from the weakest channel to the strongest. B2B teams often find that a few channels bring in most of their pipeline.

Outsource what you can't do well in-house

Outsourcing a task can be cheaper than hiring for it, especially for specialist or occasional work. If you do:

• Check the vendor's track record and ask for references from similar clients.
• Put everything in writing, including scope, timeline, budget and how results are reported.
• Track their results with the same metrics you use for your own team.

Read more about outsourced sales and marketing.

Use Six Sigma thinking to remove waste

Six Sigma is a quality method built to cut errors and waste from a process. Its improvement cycle, DMAIC, works for marketing too:

• Define the problem and goal, for example "our webinar campaign costs too much per qualified lead."
• Measure the current baseline: registrations, attendance, leads, cost.
• Analyze the data to find the root cause, such as a landing page that loses most visitors.
• Improve by testing a fix for that cause.
• Control by making the fix the standard and monitoring it.

When you build a new campaign or process from scratch, the related method DMADV (define, measure, analyze, design, verify) designs efficiency in before launch.

Automate repetitive work

Marketing automation lowers the cost of tasks you repeat often. Common candidates are lead capture and routing, lead nurturing emails, lead scoring and reporting. Map your process first, then automate the steps that are frequent, rule-based and slow when done by hand. See marketing automation tools for small businesses.

2. Increase conversions

Your conversion rate is the share of people who take the action you want, such as booking a demo. If a campaign converts 2% of the people it reaches and you raise that to 4%, you get twice as many conversions for the same spend.

Read the metrics that matter for the goal

Track the metrics closest to revenue: leads, qualified leads, opportunities, closed deals and revenue per channel. Engagement metrics such as video completion rate still help, because they show where people lose interest. If most viewers drop off in the first seconds, fix the opening before you spend more on distribution. See marketing KPIs to measure performance.

Segment and personalize

Sending the same message to everyone wastes budget on people it does not fit. Instead:

• Segment by behaviour and fit, for example customers versus prospects, or by company size and industry. More in list segmentation.
• Write a different message for each segment, focused on that group's main problem.
• Personalize what matters. Mentioning the product someone looked at helps. Showing them you know too much about them does not, and it can break privacy rules such as the GDPR.

Test continuously

An A/B test shows two versions of an email, ad or page to comparable groups and measures which one performs better. Harvard Business Review described a test at Bing in which a small change to how ad headlines were displayed raised revenue by 12%, without hurting user-experience metrics. Most tests produce smaller gains, which is why the value comes from testing all the time. Start with the elements closest to the conversion: the headline, the offer and the call to action. Our guide to split testing covers the method.

3. Increase order value

Average order value is revenue divided by the number of orders. In B2B, the equivalent is average deal size or contract value. Raising it improves ROI because each customer you pay to acquire brings in more.

Upsell and cross-sell

Upselling offers a higher tier or bigger package of what the customer is already buying. Cross-selling offers a related product. A software customer on a basic plan might be upsold to a plan with more seats, or cross-sold an onboarding service. It works best when the offer solves a real next problem for the customer. See effective upselling techniques and cross-selling examples.

Price within the corridor of the mass

In Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne describe the "price corridor of the mass." You list the alternatives your buyers could choose instead, including ones from other industries, plot their prices and volumes, and find the price band that attracts the most target buyers. Then you set a price inside that band. If your current price sits at the low end, you may have room to raise it without losing many buyers. More in types of pricing strategies.

Retarget people who already showed interest

Retargeting, which Google Ads now calls "your data" segments, shows ads to people who have already visited your site, used your app or watched your videos. You can target people who viewed a pricing page but did not book a demo, or existing customers with an add-on offer. It costs extra, so measure it against a control group to check the lift is real.

Where to start

Measure ROMI per channel first. Then cut the weakest spend, run one conversion test a month and add one upsell or cross-sell offer. Review the numbers each quarter and keep what works.