I don’t know about you, but I often go online with the intention of doing one thing, only to get distracted and end up doing something else, often wasting hours in the process. This is why one of the most important aspects of online marketing and especially content marketing is knowing how it’s going to pay off for you. If you don’t know your return on investment (ROI), then you’re not working smartly and could be doing things wrong and wasting time. There are many tools that you can use to keep track of what you’re doing and what the results generated are, with these there really is no excuse for not figuring out your ROI.

There are just three things that you need to know when trying to determine your ROI for any given action.

  1. Cost of the marketing effort
  2. Traffic brought due to the marketing effort
  3. Conversions made

With all of this information, you can determine your ROI simply by checking what the value of your conversions is, versus the value of the marketing effort. So, if you spent 1000 dollars sending traffic to a particular sales page, and made 2000 dollars, then your ROI is 100 percent. Now you can spend that 1000 dollars over again to make more money.

The above example is how many so called marketing experts will work out your ROI… which is fine unless you have costs associated with supplying products or services… for example if you spend a $1000 and generate $2000 in sales you might think your ROI is indeed 100 percent… but what happens if it costs you $1000 to produce the goods you have sold … then your ROI is zero. I’m mentioning this as it is something everyone needs to be aware of … a ROI isn’t simply the amount of money spent on Marketing and Traffic against the amount of conversions or sales made … it also has to include all costs associated with those goods or services.

So a better list is actually 4 items in length for ROI

  1. Cost of the marketing effort
  2. Traffic brought due to the marketing effort
  3. Cost of Goods or Services Provided
  4. Conversions made

By adding in these costs that so many overlook you will get a true idea of your ROI…

Not all conversions are monetary however. For example, sometimes a conversion will simply mean that someone signed up to your newsletter. In that case you can compute the cost of acquiring the list member by dividing the cost by the number of sign-ups. This will be your cost for acquisition.

Later you can use that cost to determine ROI as the list converts those sign-ups to buying customers. If it costs you 20 dollars to get each list member and you make an average of 50 dollars off each list member, then you know that it’s worth the effort provided any other associated costs are covered.

The problem is, most people don’t keep track of any of this type of information. Instead, they just work in the dark trying to make plans to accomplish success without even understanding what actions are bringing success. This is no way to conduct a business. In order to accurately measure ROI, it’s important that you know going in, how you’ll measure it and what to keep track of.

To keep track of things, you can create a chart of all your expenditures and all your income so that you can figure your ROI. The most important numbers are what you spent versus what you made. Once you settle in on that, the other information will still be important, but this is the final verdict and will answer the question of “did this work?”

Define your metrics, implement tools that can measure the progress, and then use the results to inform future action. Share them with stakeholders and others who help you make decisions. Compare the results to industry averages to find out how well you’re doing compared to others. Seek to work on improving the numbers now that you know them.

Get Clear about Return on Investment
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