Content ROI calculation is easy for those who want to do a bit of a scrappy job. You can calculate your overall expenses, calculate your overall returns, see your profit – and then see what percentage of total spend the profits are. This will give you an “overall” picture to be sure, but what about knowing exactly how your content is doing on ROI, on all your touchpoints with your consumer? Sounds tedious, right? But if you follow the workflow I’ve given you below, and do it at least once every four months or so, you’ll be able to pinpoint where your content is working out, and where it is leaking on the ROI stakes.
If you only see ROI as a final picture of your business and content marketing, that’s okay. Do the quick-and-dirty calculation. But if you see ROI as the sum total of mini-ROIs at every point of interaction with customers, you’ll know where exactly you are spending too much and seeing nothing in return. The way real experts treat any aspect of Content Analytics & ROI, is to see the returns on every single small and large objective in business. Content marketing must closely align to the buying journeys of your customers. Each touchpoint at each phase of this journey is an objective, and may have separate pieces of content for that objective. All of these must have their own profitability potential benchmarks that you set. They must also have their own ROI calculations. There’s no shortcut, unfortunately – but the gains of “deep touchpoint-specific ROI knowledge” are worth a hell of a lot of money to your business, in the long run!
Step 1: List out the complete purchase journey of each of your target audiences segments, including every single touchpoint
This is the part that is more difficult than the math you have to do. This is where your thoroughness in detailing your many customer segments, their journeys, and the touchpoints of each journey, will require you to spend time seeing the actual patterns people have taken on your site so far.
You do know what a touchpoint is, don’t you? It’s every point at which the customer comes in contact with marketing stimuli or communication from your brand content, and makes some crucial decision in favour of the brand – and where you can offer appropriate call-to-actions on your site to facilitate that decision point.
At this stage I am going to take a sample case and make the whole process visual so that its easier to see what we are doing.
Let’s say, I have three types of key customer segments – and the journey of each has about 24 touchpoints in all (i.e. 8 stages of the purchase journey multiplied by about 3 key touchpoints within each stage).
So here’s what our first chart could look like at this point …
Step 2: Calculate your total “content marketing spend” overall – and at each customer journey touchpoint
Simply add up every cent you’ve spent so far on your content marketing, during the financial period in reckoning, and also add to it everything you expect to spend during the rest of the period. Calculate content creation and content distribution costs. Remember to calculate not only the one-time costs, but also the recurring costs. Get a fix on the total “marketing spend” level you are operating at, by thus listing down your marketing costs occurring at every touchpoint of every customer segment journey.
At this stage, your first chart may start looking like this one below, with the costs incurred at each touchpoint shown in green font.
Step 3: Decide on your goals for overall profitability, as well as for each touchpoint stage of the conversion process of each customer segment
Okay, now when it comes to this stage when you are setting goals for your marketing campaign, you can do it two ways. One, look at the rest of your competitors, your industry, and see what its benchmarks are and set your goal for profitability in that range. Or two, you just say, “Forget the benchmarks for now, I want to make at least 25% more than I spend!”.
The reason we don’t set goals before we start this whole exercise, and we do it as the third step of this exercise, is so that we can set goals based on current spend levels, if we desire. We have to know our spend levels to set goals to increase or reduce them.
Now on this third chart below, which is an evolution of Chart 2, notice how I have looked at all my priorities – like which customer segment is more important to me, and of the many touchpoints of each segment, which are the most important to me. I rank my priorities by assigning a higher revenue percentage expectation wherever I think my priorities demand it, and at the other stages, I assign a lesser percentage of revenue expectation.
Let’s say Segment A customers are more important to me than others … so I make a goal to earn at least 50% revenue from that segment and about 30% and 20% of my revenues from Segments B and C. Now again, in their customer journey touchpoints, some parts of the process may be more important to me than others, so I give those points higher percentages of revenue expectation, and other touchpoints get less. (Obviously, I have to also tune up my spends at these priority points to match my revenue expectations!)
(P.S.: Hope you’re with me still and haven’t dropped off to sleep. We’re on the home stretch, I promise!)
Step 4: Plot your actual achievements against your goals, to know how well you are doing at each touchpoint and overall
If you start tracking the actual earnings at every touchpoint on your chart and match it against your goals, you will have a constant barometer of how well you are doing against your own expectations at every stage of every customer segment journey.
See this final chart below where the actual earnings I am making at each touchpoint are marked in blue font.
I can now clearly see what I am spending at each touchpoint (green), what I want the touchpoint to earn (red), and what it’s actually earning (blue).
When you add up all the actual earnings and see by how much they exceed your total spend (expressed as a percentage of the total spend) you get your “Return on Investment” (i.e. ROI)! (Read that sentence again if you need to understand it – or see the formula for ROI calculation below.)
[(Revenue-Expenses)/Expenses] x 100 = ROI.
You should calculate overall ROI – and ROI for each touchpoint too!
Here I want to emphasize two very important points …
One: Not every touchpoint transaction will see an exchange of actual money. There could be some touchpoints where the call-to-action just requires the customer to fill and submit a form, or make a choice – but without actually buying anything. But even if there is no physical money exchange, the touchpoint has definite financial value if the transaction of the customer goes through and the customer is converted one step further along the journey, isn’t it?
Because you have assigned a “financial value” to that transaction, you know what that touchpoint is worth to your overall profitability and why it is imperative that it should be carried through by the customer. If no final sale has happened, you know what you have lost, by calculating expected revenues beyond that touchpoint. You have spent to get the customer thus far, but lost the potential money thereafter.
Thus every touchpoint on your chart adds “value” to your profitability, even when no money actually exchanges hands. If you just get this one crucial message into your mind firmly, your marketing efforts will start taking on a different sharpness altogether. You will become very conscious of what you are spending at each stage versus what that stage is worth to you, and you will start cutting back on wasteful and expensive inputs at the wrong stages, and increase your customer-stimuli at all the crucial conversion stages.
Experts believe that such touchpoints that yield no monetary value but have serious “value contribution” towards your eventual profitability are of extreme significance. That’s why people are nowadays more concerned with “Return on Marketing Objectives” (the objectives achieved at each intermediate stage) rather than just on the final “Return on Investment” at the end of the buying process.
Remember: each stage of the whole process has “value” … and this way of assigning value to the touchpoints and measuring returns at each touchpoint acknowledges the relative importance of every touchpoint, in your overall scheme of things.
Two: This whole post is just a simple preliminary example of how to calculate ROI. This is just so you know if your doing as well as you should and achieving goals – and by how much your earnings are exceeding your spending. But while this is the gist of what the whole calculation is about, expressed in an easy format, there can be very elaborate additions to this principle to make ROI calculations very sophisticated.
For instance, you can also calculate the “value impact” of every single tweet or share in all your social activity, or choose to judge the “value impact” of every piece of content you publish etc. There’s no end to how detailed you can get if you want to! That’s when software and tools will do a better job than you can manually!
So what are your thoughts on this topic? Do share!
This post is incomplete without your input. The community of aspiring digital solopreneurs would feel galvanized to hear from you … so do share your thoughts on this topic with us in the comments field below this post.
Other articles in our series “Content Analytics & ROI”:
- 6 User Behavior Metrics That Affirm Your Content’s Engagement Power!
- Emotional Analytics: The New Way To Measure How Audiences Feel!