A Take-Away of Digital Marketing

Return on Investment (ROI) simply means the process of evaluating the outcome of the effectiveness and efficiency of an investment. It is an important component not only in the process of digital marketing, but in our day to day activities as well as it is necessary to measure and analyse the outcomes of whatever you invest, be it money, effort, time etc.

Measuring the performance of digital marketing is a "mandatory" step which is required for the same because only by paying attention to the outcomes we can know about the performance of the campaigns and come up with techniques to bring necessary changes to the same. In other words, optimisation of efforts.

Here are some yardsticks for measuring the end result of digital marketing

1. General performance-Leads, Outreach etc
2.  Channel based- Search engines.
3. Conversion rate.
4. Campaign based performance.

It is necessary to know from where your leads are coming from as this criteria will tell us which leads generates more outcomes.

For example let us assume that a company receives 60% traffic from traditional marketing strategies and 40% from non traditional marketing strategies. But the latter yields more conversions than the former. Although the traffic is less, investing in this will obviously give more outcomes.

One has to measure the outcomes frequently, because by doing that you can realise if your efforts have delivered positive results.

Lifetime Value of a Customer :

Lifetime value of a customer is a method used to measure your outcomes. It loosely translates to how much money an individual can spend on your company in a given time period. It is calculated by using this formula: Lifetime value of a customer= Lifetime transactions x Lifetime revenue - Lifetime expenses For example, in 5 years a company generates 10 transactions worth 1000 revenue, along with 500 rupees of expenses incurred. So the lifetime value will be 10 x 1000 - 500= 9500. In this case, the lifetime value is 9500 rupees.

Average Sale Value:

This is one of the quickest methods used in this process. It is calculated by dividing the total revenue generated through sales by the number of sales. However this technique can be used if there are minimum changes in the business model and the benchmark will differ from business to business.

Average Sale Value = Total revenue generated through sales/ Number of sales

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