Return on investment (or ROI) is a familiar concept to nearly every business owner. It is the measure of the effectiveness of a marketing strategy, represented as a percentage of positive or negative growth. In the traditional world of economics, ROI refers to a formula, which subtracts the amount of marketing expense from the gross amount of a company’s profit (or “return”) and then divides it by the marketing expense (or “investment”). By this definition, it may seem easy to put your marketing ROI into concrete figures. Just take a look at your accounting records. It’s all there in black. (And hopefully not red!)
However, when making marketing decisions, it is not always black and white. With social media marketing, for instance, there is a lot of gray. It’s true that as a part of your marketing strategy, social media can help increase customers and generate leads, but it does much more than that (when done correctly). Social media is something that over time educates, informs and engages prospective and existing customers. With social media, you have the opportunity to be a purveyor of information. You also can build a link between your team and your community, which can build trust and enhance communication.
Social media ROI is not a measure of popularity. It’s a measure of efficacy. If you only have a handful of followers, it doesn’t necessarily mean you’ve invested too much time or money into your social media campaign. To track ROI, consider the desired end – your social media goal. Is your goal to increase the number of patient visits? Are you trying to get more new patients? Is educating and informing your target audience your goal? Whatever the goal, It is critical to understand your intent before you can attach a value to it.
The same is true for the majority of other marketing decisions made daily. Before renewing or approving any contracts, ensure the tactic is (or will) turn a profit. If it doesn’t, why spend money on it? If it is a new endeavor, gather as much intelligence on the results similar businesses have achieved before committing. And don’t ever worry about hurting someone’s feelings. Business decisions are business decisions. They aren’t personal. You have to do what is best for your company and your bottom line.
We find many clients love to donate or sponsor local businesses, sports teams, and schools. This is a wonderful way to give back to your community, and we highly recommend it. You should, however, ensure you do it with strategic intent. There is always a place for goodwill, but if you are managing a budget (and we hope you are), always identify how you can maximize this opportunity to grow. Whatever perk that’s provided for your contribution, track its efficacy. If you aren’t growing because of it, consider doing something else in the future.
For long-term growth, it is critical to understand ROI and how the choices you make can impact your business. Marketing is fluid, and you must continuously pivot based on the outcomes of the tactics you employ. Want more marketing tips? Check out our marketing blog.