The New Year is a perfect opportunity to reflect on the previous year and create a goal to make improvements as a new year begins. While personal goals such as eating less junk food or developing a new hobby are beneficial, the New Year is also a great time to take stock and set goals for the year ahead for your bank or credit union. Well-thought-out resolutions can have a significant impact on your financial institution’s success.
Here’s what we know: Digital marketing is here to stay. And marketing on digital channels is an investment in your bank or credit union’s long-term success, not simply a business expense. As an investment, you want to be able to measure it. To gauge digital return on investment (ROI) is complex, because many variables are in place across numerous channels. However, calculating your ROI is the best way to measure the success of your digital investment and its effect on your financial institution’s overall performance.
As mentioned above, digital ROI can be difficult to calculate for a bank or credit union. This is because, while you do offer your customers and members various products to elevate their quality of life, financial institutions specialize in services. This means calculating ROI can be challenging, as all your digital efforts across channels are not specifically tied to a single product sale.
However, that is no reason to be discouraged. In fact, this New Year, DeepTarget wants to challenge you to examine your digital ROI. With this challenge in mind, we bring you 4 metrics to measure your digital marketing’s success (and the basics on how to calculate them).
Most of these suggested metrics will not result in a direct ROI calculation, but can help you determine in a broad sense of whether or not you are receiving a good return for all your digital marketing efforts. That being said, here are a few key metrics to consider:
Customer Lifetime Value ROI
You can’t really know the ROI of all your marketing activities until you understand what the average customer should spend on financial services over the course of their lifetime. This is where customer lifetime value (CLV) applies.
As we’ve previously stated, e-commerce businesses can more easily achieve an exact calculation for return, but service industries need to determine a more general projection using their current and historical customer data. CLV is worth the extra legwork because it helps you to know how much you need to spend in marketing and advertising to profitably acquire new customers.
Cost Per Lead ROI
Once you have a good idea of how much you can spend on advertising and marketing, it is good to next determine your cost per lead. If your website, e-newsletters, digital ads, etc. are collecting “leads” you need to use this data to calculate how much you are paying for each lead. If that number is more that what is earned by the product sales, that is a good indication that you are not getting a suitable ROI for these investments. And, while these numbers may not be as “concrete” as e-commerce companies, you should still be able to get an overall sense of whether these marketing efforts are effective and profitable.
Cost Per Acquisition ROI
This metric tells you what you are paying to acquire an actual customer, not just a lead.
Your cost per acquisition (CPA) is calculated simply by dividing your annual digital marketing costs by the number of sales generated in a year. The resulting number tells you what it costs your company to get a sale, giving you a more defined understanding of your ROI. This measurement is a little more straightforward sounding; however, it can be difficult to determine what all counts as a marketing cost as it can include paid campaigns as well as branding activities, SEO, and more.
Conversion Rate ROI
Any effective marketing plan will track its results and respond to the data. Whether your digital traffic is coming organically from web searches, from paid advertisements, sponsored banners, or linked content on email or social media, this information tells us what are customers respond to and, most importantly, which of our marketing efforts are working.
These conversion rates let us know which efforts are successful, and perhaps even more significantly, which ones aren’t. If one digital channel or device is not resulting in conversions, it may be time to revamp or reinvest that area. Similarly, if the data shows success in a channel or device, that let’s you know where a golden opportunity for focused marketing efforts will likely bring the most return on your digital investment.
So, the million-dollar question is: Are you getting ROI?
As we begin a new year, let’s incorporate a data-driven approach to all our marketing efforts. To do this, you have to integrate ROI calculations and let the metrics guide your marketing plans. To help you rise to the challenge this year, DeepTarget is offering a digital channel effectiveness ROI calculation FREE for a limited time!
In our data-driven world, you should be certain about your ROI. Let’s get started!