HOW TO MEASURE THE ROI OF YOUR DIGITAL EXPERIENCES
Despite what many people claim, measuring the value of digital experiences is almost never impossible. It is often complex, sometimes expensive and like many other forms of marketing, such as TV or radio, not a precise science, but like every other form of marketing it should always be attempted. With an ever increasing marketing toolbox, we need to know what works, and what doesn’t.
The equation for ROI is pretty simple.
return on investment = (gain from investment – cost of investment) / cost of investment
However, marketing is not an investment in the same way as buying a piece of land in the hope it will gain value. The gain from an investment in marketing doesn't tend to come back to the company in one simple lump sum at a set time. Occasionally it can be seen through indicators such as sales figures but more often than not, the impact is part of a long-term investment in the brand, where the gain can be measured but very often impossible to pin to one single activity.
I'm going to take a punt here and guess that when many of us talk about ROI, what we mean isn't strictly a financial return on investment, but the delivery of value for the company (and of course, the customer). Over time, that value should all lead to an impact on the bottom line, but because it is rare for just one marketing activity to be happening at a single time and for the sake of accountability and learning, it is probably more useful to tie that value to more immediate indicators such as customer satisfaction or brand perception.
So if we accept that there is more to it than sales, then we need to find metrics that will let us know if we are on the right track and we need to find a way of employing them on a day-to-day basis. There is no 'one-size fits all' here either. It is more of a case of picking the ones that suit you best and trying to find new and better ways to capture the data you need.
User paths, sales funnels, customer journeys - they all describe the same thing; the relationship you have with your customers from the moment they first come into contact with your brand through to the time that relationship ends. These relationships can often be grouped together as cohorts and tracked as a group throughout this journey - indicating where things are going right, and where they're not.
Eric Ries, the author of Lean Startup, refers to this as funnel-metrics or cohort metrics:
“The best kind of per-customer metrics to use for ongoing decision making are cohort metrics. For example, consider an ecommerce product that has a couple of key customer lifecycle events: registering for the product, signing up for the free trial, using the product, and becoming a paying customer. We can create a simple report that shows these metrics for subsequent cohorts (groups) over time…If these numbers are holding steady from cohort to cohort, then we get clear feedback that nothing significant is changing. If one suddenly shifts up or down, we get a rapid signal to investigate."
If you have an online business, then this all gets a lot easier, but if you're out in the 'real-world' its a lot more difficult. We're not yet at the stage (thankfully!) where we can attach GPS devices and cameras to our customers 24/7 - despite the NSA's best efforts to set a precedent on that front.
Some of the measures we can use in tracking these journeys are:
- Number of users
- Net promoter score*
- Avg. Time spent
- Engagement rates
- Conversion rates / Sales
- Attendee quality
- Social Media sentiment
- Digital channel metrics
- Social media engagement rates
- Number of impressions
- Number of signups
- Number of tickets sold
- Number of downloads
*Net Promoter Score
I wanted to take a minute to pick out the Net Promoter Score from the list, mainly because it is the one thing on the list that many will be unfamiliar with. But it's probably the best way to find out how your company is perceived in the market. The Net Promoter Score is a controversial customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix. NPS is based on one question: On a scale of 0 to 10, with 10 being extremely likely, how likely are you to recommend our company to a friend or colleague? (although a 1-7 scale has been proven to be marginally more effective).
It has been widely adopted by the likes of E.ON, Philips, GE, Apple Retail and American Express, with reports that the bonuses of many managers are tied to their company's Net Promoter Scores.
The evidence as to whether Net Promoter Score is a tool for growth in and of itself is thin but it is still a handy metric for seeing how your customer experiences are creating an impact. The tools for measuring can be as simple as a person with a clipboard, a touch screen on exit or follow up emails. The number it generates is simple enough to communicate internally, trackable throughout a cohorts journey and with further expansion questions can unlock issues and opportunities.
Putting it all into practice
So given we have a menu of ways to track and measure value, what process can we use to employ them?
- Define the measures of success for the experience
- Establish what data outputs will be needed to conduct analysis
- Create report templates
-Plan how you will collect data
-Set up dashboards, surveys and database integrations
- Instigate plans, e.g. deploy survey takers, send follow up emails…
Report & Optimise
- Real-time indicators
- Final results reported as insights and implications format
A final thought on quality time
It is by no means an original thought, but all brand engagements are not created equal. There is a difference between being passively presented with symbols and imagery of a brand and having a physical, engaged and ultimately emotional experience. These experiences are what impact on long-term ROI and what make people share their feelings with family and friends. These experiences are the hardest to track because the impact is long-term (sometimes felt over a lifetime) but if we can measure the quality time we spend with customers in key areas and timeframes, using tools like the Net Promoter Score, we will be well on the way to proving ROI. If you don't already have some of these tools in place, we suggest starting with something like the NPS question. Once you have this, experiment with an innovative engagement, measure again and see the difference. The path to more measurable marketing starts with this single step.
…and just to show we practice what we preach, we'd love to know your thoughts on this article too.