How to measure your ROI
The formula for calculating ROI is: ROI = (Earnings – Cost)/Cost. ROI measurement is used to assess how successful the business is. Besides, it shows what is working and what is not, enabling you to allocate resources and strategies to be more effective. The three main steps in measuring ROI are as follows:
Track
For an effective measurement of ROI you should start with identifying the right metrics. Track the performance of your campaigns and your business according to them. Moreover, think about the timing of your calculations: is it only the event itself or should you also take the time after? If so, how long should it be? After considering all these factors you can track the performance and move to the next stage – “Analyze”.
Analyze
In order to get your ROI you have to calculate the costs and then identify the returns you got. After that you can start with analysis itself. There are 2 ways of doing so – comparing ROI with previous periods, or analyzing each separate part of a campaign. The first way is relatively simple, as you have to compare recent ROI results with previous ones. It will show if the results improved or not, but will not explain the reasons for that.
The second way is more complicated, but may bring more precise results. The campaign is divided into separate parts and then each aspect is analyzed. It is used for a better understanding of ROI and identification of parts that can cause problems.
Understand results
ROI results are relatively easy to understand. If the returns exceed costs, then the ROI is positive and the business is successful. However, it is not so easy as it may seem. Keep in mind the goals that you had before the event and assess the results according to them. It will show if you reached your goals and your campaigns are effective. These ROI numbers will also influence different business aspects, including sales, marketing, customer relationship etc. They will be an important factor in developing new business strategies and in making new decisions.
Taking these steps into consideration, you can calculate your ROI in a better way and develop a good strategy based on that. However, you can face several challenges while measuring ROI.
Challenges and problems in measuring ROI
There are numerous challenges that people face when measuring the ROI in the events sector. This is because the scope, metrics, and goals vary from one event to the next, making it difficult to have a standardized way of measuring ROI. Some of the challenges are outlined below.
Vanity Metrics
Although the data gathered may be accurately entered and filled, it may not be valuable for measuring your ROI and can mislead the results. Only actionable metrics should be taken into account, such as Conversion Rate, Social Media Engagement etc. Another problem can arise from rush entry or lack of counterchecking. When the results have to be ready in a short period of time, people can make a mistake and get the wrong results. All these flaws present a challenge when measuring ROI, as it can be hard to record the specific figures and proceed with them in the right way. Data from Lead Forensics show that 42% of B2B companies encounter challenges in measuring ROI due to messy data.
Not reaching the target group
As an event organizer, reaching your target audience is your priority. However, some people struggle with identifying their target group. Not knowing where to start thus becomes a big challenge to create future actions.
When you have identified your audience, you may face another challenge – communication. Event organizers may use wrong channels to communicate with their audience, hence not reaching the right people.
Different goals
Before starting ROI calculations, it’s important to understand what exactly you want to gain from the event. Your goals will influence the ROI calculation, that’s why clearly define them from the start. Is it only about the number of sales or should you also include leads and potential customers? Do you focus on increasing brand awareness and getting interest in a new product? Clear goal identification will prevent you from taking vanity metrics into consideration and from getting a wrong result.
Do you want to learn more?
Do you want to learn more about increasing your ROI and having successful investments? Then check out our free e-book “How to maximize your events ROI”!