When you measure campaign results, is it always necessary to focus on ROI?

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Answered by: Lori, An Expert in the Marketing Plan/Strategy Category
It depends on the company and the goals of the campaign. Most companies, particularly commerce sites, use return on investment, or ROI, to measure campaign results. In a typical scenario, the marketer will set the analytics program to compare the cost of the campaign to the revenue generated from the email, tweet, or text message. Others might measure revenue per page, revenue per click, or revenue per customer.

However, not all campaigns are judged solely on the revenue they generate. In some cases, the proper benchmark is the most traditional of all - the response rate. In the traditional marketing world this meant dividing the number of responses by the number of pieces mailed. In the e-commerce world, it means dividing the number of click-throughs by the number of emails sent. However, this measurement had an inherent flaw in that a high response rate didn't necessarily yield a high ROI. All too often, a large number of customers would respond to a mailing or a special offer, only to purchase less than the company had hoped.

That's why many marketers have shifted the focus of their efforts to actual revenue and not number of responses. Today's analytics tools make this much easier to calculate. But sometimes revenue isn't the focus of a campaign at all, at least not in the short term. Some companies, particularly those that offer high-value products and services, are more focused on lead generation, which is the first step towards a purchase.

For instance, a car isn't exactly an impulse purchase. A lot of research and comparison shopping occurs before the sale is made. If an automaker or auto dealer sought to measure campaign results based on who purchased a car, they;d likely find themselves at zero every time. A more realistic campaign would seem to generate a list of potential car buyers.

For instance, the initial email might promote a particular model, or new features, or a special limited-time offer. A certain number of prospects would click on the email to learn more about the car, or fill out an online form to be contacted for more information. No money was made on that specific email, but those prospects that responded would receive a follow-up email with additional information, or an invitation to visit a sales rep, or some other call to action. Prospects who respond to THAT email would receive yet another communication, whether by email or by phone. And on the process goes until a final sale is made, at which point the ROI can finally be calculated.

As an added benefit, throughout the process, those same analytics would be used to target other prospects with similar demographics, which would likely increase the overall click-through rate. So ROI isn't always the best benchmark to measure the success of an email campaign. The right benchmarks vary according to your specific business goals, the types of products and services you offer, and whether your sales process is simple and immediate or longer and more complicated.

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