ROMI – The Value of Marketing Performance

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How do you know if your marketing efforts are worth all your work?

Step one when creating a marketing or business plan – set your goals. But a step easily overlooked is to make sure that you are on track to reach those goals, which is why we must measure our performances. It’s the results we turn to in order to improve our work.
Several key performance indicators can tell you if your activities are on target. One of the most common ones is “return on investment” (ROI). However, it is not the ideal measurement for your marketing achievements. Read along and learn how to measure marketing performance with ROMI instead.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]


Using ROI for your marketing is like taking the highway towards misjudgment. Why? Marketing is often considered a different type of financing compared to your other ventures. Actually, many of your costs can be seen as investments, for example, if you put your money into inventory, whereas marketing could be perceived as an expense. Even though marketing is more of a ”risky business,” how do we determine that your marketing efforts are valuable to your business? This is where ROMI comes in.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]

What is ROMI?

ROMI, cousin to ROI, is short for “return on marketing investment,” and puts a value on your marketing endeavours. What marketing activities are the most effective? ROMI gives you an indication of just that. Although it might not be exact science, it does work as a benchmark where you can compare your different marketing goals over time.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]

How to Calculate ROMI

Time to try this metric out for yourself! In a gist, it’s about taking the revenue and divide it by the cost. Have your math goggles on? Let’s go.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]You started a marketing campaign and got some qualified leads. 45 of them to be exact.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9711″ alignment=”center” animation=”Fade In” img_link_target=”_self”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]Each one of those leads is worth €100. However, each one also cost you €60. And perhaps you invested in some promotional material as well? That is a static cost, and in this example it’s €1500.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9690″ animation=”Fade In” img_link_target=”_self” alignment=”center”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]We start off with the easiest part, the total revenue. The value of each lead times the number of leads shows us
that you just gained €4500. You go![/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9706″ animation=”Fade In” img_link_target=”_self” alignment=”right”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]Unfortunately, there was a cost to this equation as well. Each lead cost €60 and we multiply this with the number of leads. Don’t forget to include the static cost too. So the total cost is 4200 euro. :([/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9702″ animation=”Fade In” img_link_target=”_self” alignment=”center”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]So how much did you make from this campaign?[/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]Your total revenue minus the total cost means gives you an uplift of €300.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9698″ animation=”Fade In” img_link_target=”_self” alignment=”center”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]Now we get to the main topic, ROMI. Take the uplift and divide it by the total cost. In this example, your ROMI is 7%[/vc_column_text][divider line_type=”No Line” custom_height=”20″][/vc_column][vc_column width=”1/2″][image_with_animation image_url=”9694″ animation=”Fade In” img_link_target=”_self” alignment=”center”][divider line_type=”No Line” custom_height=”20″][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]With ROMI being 7%, you can see that this campaign was valuable to your marketing and business. You actually even made a profit (had your ROMI turned out to be 0% you wouldn’t have made any cash, but you wouldn’t have lost anything either). In other words, as long as your ROMI presents a positive number, that specific marketing practice is worth your while. However, if it’s a negative percentage, well, then it’s time to rethink your resources.
Also, ROMI calculations can be way more complex than this. For example, you could also calculate margin ROMI (mROMI) where you include the contribution margin. So sure, things can quickly become complicated, but we hope that with this simple example you feel inspired enough to start measuring your activities![/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]So perhaps you don’t feel like calculating this every day for every campaign you have. Instead, eMarketeer can do it for you! A dashboard feature is soon to be released to our PRO account users and not only does it calculate ROMI, but it also helps you track your whole marketing performance. Another reason for loving marketing automation.[/vc_column_text][image_with_animation image_url=”9684″ alignment=”center” animation=”Fade In” img_link_target=”_self”][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]To learn more about goals and measurements, take a look at our video “Goals and ROMI Explained.”
What metrics are you using to measure your marketing?[/vc_column_text][/vc_column][/vc_row]

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