Monday, October 31, 2011

How to measure a Return on investement & Fore casting a data Simplicity of a Analytics Scorecard

A marketing scorecard is a single spreadsheet that compares the potential or actual return on investment from all channels. Yours might look something like this:


A scorecard has 8 different components:

  1. Channel – The various campaigns broken down by channel and source. For example, banner ads are separated by site where you purchased.
  2. Spend – The total spent on the campaign buy
  3. Visits – The number of people who came to your site as a result of the campaign
  4. CPC – the cost per click, or visit, calculated as Spend/Visits
  5. Conversions - The number of orders or leads generated
  6. Cost-Per-Sale – Cost/Sales
  7. Other Conversion Metrics – Your specific business model may require other data to compare ROI
    • Retailers – Average Order Value (AOV), Net Profit, ROI
    • Lead Generators – Opportunities, Lead Score
  8. Any Additional Costs – You may want to include costs associated with running campaigns
    • Agency Fees – Search agency, graphic design, landing page help, etc.
    • Personnel Fees – The cost of employees managing the buys

Using a Marketing Scorecard

The marketing scorecard is a template that you can fill in with:

  • Forecast Data – For each channel and source you’re evaluating, get estimates from vendors and use past data from our own analytics to estimate the spend, visits, and conversion data. This will give you a rough estimate of whether you expect the campaign to be profitable and the relative efficiency of each investment. These estimates then serve as the goals as the campaigns launch.
  • Measure Campaigns – As actual data is available, you can replace your estimates with that information to see real return on investment.
  • Goal vs. Actual – You can use the Scorecard to track performance vs. goal, calculate the variance and use that to make changes mid-campaign or improve the accuracy of future forecasts.

The Simplicity of a Scorecard

It’s easy to get lost in the data in marketing. A marketing scorecard is a simple tool that is easily communicated throughout the organization and simple to understand. It’s the first step in democratizing data for your company.


shahrukh said...

This information is really very useful for me. Thank you very much for such important information.


jindi said...

Nice tips. Excellent post. Really appreciate your effort for posting such a informative blog.