ROI is a calculated value and, therefore, the answer will only be as accurate as the data being used in the formula. How your company approaches ROI depends a great deal on your company’s strategy for marketing building products. According to Harvard Business professor Michel Porter, there are three types of strategies:
Cost leadership. If your company focuses on direct response advertising, then it uses a cost leadership strategy. Direct response is fairly easy to measure and, therefore, your company’s ROI should be fairly straightforward.
Focus. If your company is focused on a particular market segment and has a limited marketing budget, then it is most likely employing a “focus” strategy. These types of companies are usually either regionally focused or cater to a particular type of customer. Also, the ROI equation is a bit more simplified for a company with a focus strategy.
Differentiation. If your company is using a differentiation strategy, then your marketing efforts are more intensive than companies using other strategies, because your success depends on your customers believing that you offer better building products than your competitors. In order to accomplish this, your building product brand has had to build passion and desire among its customer base. This is a strategy that can be very profitable because customers are willing to pay a premium for brands they trust.
As the complexity of the customer path continues to evolve and expand across multiple touch points, the ability to attribute sales to specific channels is becoming increasingly challenging. In order to establish appropriate ROI for each channel, building product marketers need to understand the influence of each in the customer’s path to conversion.
Three key steps that help effectively attribute ROI:
1. Identify key touch points. Customers navigate through a series of touch points in their buying journey. They may start with reading an online review, then search online to compare prices and end by having found a site that offers cash back on purchase. In addition to the online channels, their intent may have been triggered by traditional (offline) media, like a print advertisement or television commercial.
It is important for building product marketers to understand the key touch points involved in your customer’s buying journey in order to ascertain the value offered by each.
2. Track and measure touch points. Third-party tracking systems will allow you to monitor cross-channel activity, with the goal being to uncover the multi-channel paths that most effectively drive conversions. The path your prospects and customers follow and how they interact with each touch point is key in being able to move to the next step.
3. Understand the value of each touch point. Whether your company uses a multi attribution or value attribution strategy, the key to improving ROI is to know where the most valuable paths to conversion occur. When you understand this, you will be in a better position to understand the value of sales and tie it back to an effective return on investment.
To learn more about Michael Porter and his achievements, click here.
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