3 Hurdles Businesses Face When Trying To Measure ROI

3 Hurdles Businesses Face When Trying To Measure ROI

There are plenty of hurdles the average small business owner has to clear. In fact, you could make the argument that your job as a small business owner is essentially to put out small fires every day. But one of the most confusing (and important) challenges for small business owners to overcome is figuring out how to properly measure ROI. That’s why today, we’re going to focus on how the average small business owner should go about measuring the ROI of their marketing efforts and determining just how effective they are.

  1. Ignoring The “Investment” of “Return on Investment”

Business owners have the bad habit of caring about profits more than they care about costs. Now, to be fair, this comes from a seemingly reasonable mindset. There isn’t really any guarantee on your returns, but if you want to win, you need to spend money, right? Well…yes and no.

You should always be aware of your costs, and make an effort to make never spend a dollar you don’t need to spend. Waste is the invisible killer of profit margins. Too often, we’ll ask the question “but what does it cost?” to business owners, and usually find they have no consideration for the costs of the process.

It’s a common issue that business owners fall into when they’re trying to measure performance. Instead of looking at the big picture, they start focusing exclusively on the results side of the ROI equation. When it comes to ROI and marketing efforts, a result is only as effective as the money you spent getting it.

There are plenty of reasons why business owners should have constant interactions with the people in charge of their business’s finances. Making sure that your ROI is constantly being monitored is one of the easiest ones to point out. Small business owners need to rely on the financial side of their business to be sure that the data of their investments are properly structured, accurate, and delivered in a usable way. The reality of running a small business is that your finance team is the guardian of your company’s revenue and profit — the “Investment” part of “Return On Investment.”

If you’re trying to track ROI, your best bet is to enlist the help of your Finance team from the very beginning and be sure that you’re communicating with them effectively from the very beginning. Having ROI figures that are supported by the figures your finance team presents will make your planning your next steps significantly easier.

  1. Expecting Technology To Compensate For Poor Planning

To be entirely honest, no small business owner can hope to successfully determine their ROI without the right tools by their side. One of the easiest ways to determine whether or not a business will continue to grow is by recognizing the how well a variety of tools and services are used in conjunction with each other.

Of course, it can be very easy to view these technologies as a bit of a crutch. We’ve all witnessed it at some point. The business owner is desperate to show that their expenses when it comes to marketing are reasonable and justified, so they look to market attribution software or Shopify store themes in the hopes that it would fix the problem.

There’s just one problem: that new technology probably won’t be the saving grace that they thought it would be. Why? Because the reality of marketing technologies is that they rely on one another. You can’t expect any single piece of technology to fundamentally solve your problems. Which means that success with the technology you decide to track ROI with is going to depend on whether or not it can properly combine it with the other services and platforms you’re using.

Market attribution software, marketing performance management solutions and marketing automation are all types of marketing tools that rely on being properly combined with a variety of different marketing systems in order to maximize their potential.

Your best bet, if you’re looking for accurate ROI tracking is to use a CRM tool, as well as an MPM tool, where costs are successfully tracked, followed by a marketing automation tool to ensure that customers are properly engaged.

  1. Trying to Determine A Single ROI Number

One of the biggest issues that business owners have struggled with when it comes to tracking and determining marketing ROI is thinking that it’s somehow plausible to come up with a single accurate ROI result. There’s this idea that you can come up with a simple, accurate measurement that will be somehow work in any situation.

Sadly, no such metric exists in the world of ROI measurement. To properly measure performance, you’re going to need a variety of different ROI measurements. Things like aggregate ROI, ROI by a particular channel, ROI by a particular campaign, so-called cost-per metrics, and the overarching return on a specific marketing investment for the entire marketing strategy (ROMI) all factor into your decision-making process.

As a business owner, you’re better off taking the time to properly figure out what you’d consider a suite of appropriate ROI measurements that work for your business.

What strategies do you implement in your business to monitor ROI? Share your insights in the comments.

Category Business