How to Track the ROI of Your Life Science Digital Marketing…
Digital marketing is powerful. Content marketing, in particular, is proving to yield incredible results. According to Demand Metric, content marketing costs 62% less than traditional marketing while generating roughly 3 times as many leads. You donât want to rely on averages, however. Why implement a strategy and just hope that it works?
You might be one of the outliers on the low end, actually losing money you invest in digital marketing. You also might be one of the outliers on the high end, generating revenue hand over fist. Either way, how would you know?
Itâs remarkable to me how few marketers, let alone business owners who have so much else on their plate, take the time to make sure theyâre getting a healthy return on their companyâs investment.
The failure to track ROI is even more baffling when you know how easy it can be to get started.
The Fundamentals of Tracking The ROI of Digital Marketing Strategies
Only one metric truly matters to the bottom line of your business: Cost per Acquisition (CPA).
Knowing your CPA for each product or service (since they differ in price) adds up to your total marketing ROI.
Youâll need a minimum of the following metrics to calculate your CPAs:
How much youâre spending on any digital marketing campaign
How many visitors are coming in through each channel
How many sales youâre achieving
Your numbers donât need to be exact. Youâll always have a few people slip through the cracks or create false-positives. Donât worry about that. Just assume a margin of error and carry on.
Note: You might also want to estimate the lifetime value of a customer. If you have a firm lifetime value calculated, you can make a loss when acquiring each customer in confidence that youâll make that money back.
Your âdigital marketing spendâ will break down into the following categories:
Subscriptions to software youâre using
Hours spent (and the price of each hour) including employees, freelancersâ¦and donât forget yourself
Paid ads or promoted content
Each âdecision pointâ in your sales funnel, such as:
Visiting your site
Subscribing to your email list
Signing up for a consultation or calling your sales team
Choosing to be your customer or client
An example of dashboard we create and share with our clients. We keep it easy to read and focused on the most important datapoints.
The Structure of Solid ROI Tracking
Letâs look at a hypothetical.
Mr. Pharma wants to sell supply services to R&D departments.
He knows his offering will provide a lot of value to customers compared to whatâs currently on the market, but itâs difficult to change old habits. The sales cycle is longer than he had hoped. It becomes clear that it will be crucial to accurately track the ROI of all his marketing and outreach efforts.
He starts off by sketching out his sales funnel. Since his leads need a fair bit of warming up before they typically consider switching over, Â the center of his funnel is an email newsletter that goes out every week, crammed with as much interesting news and tips as he can muster for this specific audience type. At the bottom of each email is a soft sell to try out his software for free for two months.
There are three critical points in this funnel:
Reaching the right audience and how many of them click through to the website
Signing up the newsletter
Clicking the link at the bottom of the newsletter
You could track an indefinite number of metrics here, from the amount of time someone spends on each page of your website to how many are new vs return visitors to how long people stay on the email list before trying out the software, and that can all be usefulâ¦
â¦but Mr. Pharma doesnât have time for that. He focuses on the most important:
How much he spends on creating content and promoting it
How many clicks to his website (tracked with Google Analytics)
How many email signups
How many free trials of his software
How many paid subscriptions to his software
By tracking only the date and amount of each of the above metrics, Mr. Pharma can answer the question, âWhat is our ROI this month? Is it up from last month?â He can also answer, âWhereâs the weakest link in our sales funnel?â
Digging a Little Deeper
What if you want to know more?
What if you want to be able to ask, âWhat was the ROI of [X] ad or [X] article?â
To answer that, you need trackable links.
How to Track Incoming Traffic
As part of the Google Analytics suite, you turn any URL into a link you can track from within your analytics.
Generate a tracking URL for your campaign with the free tool from Google Analytics
There are five potential parameters you can use (although only âCampaign Sourceâ is mandatory):
Campaign Source refers to what your visitor was on before reaching your site. Examples would be Google, Facebook, or the name of an email newsletter. This allows you to see which traffic sources are bringing in the most people.
Campaign Medium code refers to the type of content the visitor was on. It could be email, paid ads, guest posts, or social media.
Campaign Name is just as it sounds. Name each specific campaign with an easy-to-remember label, such as â[X]-product-launchâ or âBlackFridaySaleâ. If you donât have a specific campaign on the go, you could identify a link with an on-going campaign like âContentMarketingâ or âinboundâ.
Campaign Term is meant for paid advertising only, to make a note of the keywords (or âtermsâ) youâre targeting.
Campaign Content is for fine-detail. Use it if you have two ads or two social media posts that point to the same URL, and you want to see which one will bring in the most traffic.
Googleâs own link shortener will be discontinued on the 30th of March, 2019, but their Campaign URL Builder has already paired with Bit.ly, a separate link shortening service, to turn those large, cumbersome UTM links into something more Twitter-friendly.
How to Track Conversions on Your Site
Remember this: Donât use UTM tracking codes on URLs within your site.
If you have an article on your company blog that links to a consultation form, you might be tempted to add a UTM tracking code to that link. You want to test the effectiveness of the article. Seems innocuous enough, right?
Wrong. Youâve just set yourself up for a corrupted data set.
If people find your article any other way (through a search engine, sharing on social media, or while browsing around your site), those who click through will be indistinguishable from the traffic you invested time and money to attract. This difference is essential for calculating ROI.
Luckily, when someoneâs on your site, tracking them is much easier.
Set up a âGoalâ and Google Analytics will keep track of every visitor that reaches that goal.
If someone enters your site through a UTM link, clicks around a bunch and eventually winds up on your consultation form, that conversion will still be attributed to the correct source.
The 3 Most Common Mistakes That Muddy the Data
1. Caring too much about awareness
According to the Fournaise Marketing Group, a full 77% of marketers believe that awareness is a key indicator of the effectiveness of a marketing campaign. This is a pretty shocking statistic. Awareness could be an indicator of the potential for sales at best, but sometimes not even that.
Itâs all too common to spend a lot of money attracting people who are neither willing nor able to buy your product or service. It doesnât matter how much awareness youâre getting if that attention doesnât, at some point, become revenue for your business.
2. Caring too much about engagement.
Engagement is slightly closer to the metrics that matter, but still pretty far off. Again, non-commercial social media posts can get plenty of engagement (likes, shares, comments) without any of that translating into a sale.
An example might be posting a fascinating article about something tangentially related to your product or service, but if you promote it to an audience that either canât or wonât buy from you, it doesnât matter how much they like the content!
3. Making it too complicated.
All that matters is how much money you spend and how much money you make. Any metric beyond those that you track must be added only in the direct service of reducing the former or increasing the latter. Itâs surprising how easy it is to forget about this.
If you boost a Facebook post that leads people to a landing page with a consultation form, for example, the only metrics that really matter are how much you spend, how many people click through to the page, and how many fill out the form.
Other metrics might help tweak the effectiveness of each step, but if you know you can convert 5% of consults to paying customers, then you know how much you can afford to spend on boosting the post. Keep those numbers in the black and only then worry about incremental improvements.
How to Get Started Today
Sketch out your current sales funnel (how are people coming to your site)
Identify the most important âdecision pointsâ that your potential customers make on the way to paying you money
Create a spreadsheet with which to track your spending and the results of your decision points and sales conversions over time.
If youâre not accustomed to tracking your ROI clearly, the above is a great way to get started. Itâs good to get a handle on the broad picture before you start to dive into the finer details, where thereâs the danger of getting lost in metrics that donât matter.
With the above data, you can see which decision point is underperforming and which is doing great. If youâre struggling to get people onto your email list, for example, you need to know whether thatâs because no oneâs visiting the site in the first place or whether you have a ton of traffic with few sign-ups. Once you know that, you know where to focus your time and energy to move the dial.
If youâd like your marketing efforts to be 100% transparent to you, Labiotech provides in-depth analytics report for life science companies. We have a team of marketers and data analysts experienced in the life science industries that can calculate your ROI and give you seasoned advice of where to go from here. Â Contact us for friendly advice and to find out how we can help you make the biggest impact possible on your industry.