We all want quick results from our mar­ket­ing cam­paigns. As entre­pre­neurs, quick sales mean more mon­ey in our pock­ets that we can invest back into our grow­ing busi­ness­es. Imme­di­ate con­ver­sions can also be val­i­da­tion that what we’re doing is work­ing. If cus­tomers are pur­chas­ing quick­ly, it means our cam­paigns are res­onat­ing with our audi­ences.

But focus­ing only on the imme­di­ate ROI of your mar­ket­ing cam­paigns can actu­al­ly be hurt­ing your brand and long-term goals. While imme­di­ate results can be strong indi­ca­tors of how suc­cess­ful your mar­ket­ing is, the returns can dis­ap­pear as quick­ly as they came. Work­ing in these small bursts of growth can make it near­ly impos­si­ble to real­ly scale your busi­ness, forc­ing you to start fresh with each cam­paign.

Rather than look­ing just at your imme­di­ate returns, focus on how each cam­paign improves your brand long-term. Let’s dis­cuss why this is impor­tant and how you can shift your focus away from just short-term returns to con­sid­er long-term invest­ments as well.

The Downside Of Only Measuring Short-Term ROI 

When you’re only mea­sur­ing direct results from a mar­ket­ing cam­paign, you’re only look­ing at the returns for the dura­tion of that cam­paign. When the cam­paign is done run­ning, you tal­ly up your total amount of sales and call it closed.

While it’s impor­tant to know how many sales come from a par­tic­u­lar cam­paign or event, this mind­set means you’re start­ing fresh with each cam­paign. You’re not look­ing at the impact of the cam­paign beyond when the ads stop run­ning.

How­ev­er, in busi­ness, there is no fin­ish line. Even when a cam­paign is done, you still should be attract­ing clients and cus­tomers. This means you need to look at the long-term impact of your mar­ket­ing to tru­ly under­stand your return on invest­ment.

Fail­ing to look at long-term returns means you could be ignor­ing or for­get­ting about cus­tomers who could poten­tial­ly turn into repeat buy­ers. If you’re ignor­ing the needs of the cus­tomers you attract from your indi­vid­ual mar­ket­ing cam­paigns, you could be stunt­ing your own business’s growth.

How To Measure Long-Term ROI 

How To Measure Long-Term ROI 

Many entre­pre­neurs and mar­keters default to mea­sur­ing short-term ROI because it’s easy. With ana­lyt­ics and mea­sure­ment tools, you can eas­i­ly track how an ad con­verts or how many cus­tomers you attract through a cam­paign. Long-term ROI can be a bit more dif­fi­cult.

In order to mea­sure your long-term ROI, you need to find the right met­rics. Rather than just con­ver­sions or sales, you want to look at out­comes rather than results.

While out­comes and results can feel inter­change­able, they’re actu­al­ly quite dif­fer­ent in the mar­ket­ing world. A “result” is a small­er met­ric with­in the mar­ket­ing cam­paign, while an “out­come” is some­thing more tan­gi­ble.

Con­sid­er this exam­ple. Let’s say you run a mar­ket­ing cam­paign that boosts your web­site traf­fic by 2,500 peo­ple. Of those 2,500 peo­ple, you land 15 new cus­tomers. The boost in web­site traf­fic would be your result, while the new cus­tomers would be an out­come.

How­ev­er, there are dif­fer­ent lev­els of out­comes with­in your cam­paign. While new cus­tomers are an out­come, it is still a short-term return on your mar­ket­ing invest­ment. A longer-term out­come would be cus­tomer life­time val­ue.

The life­time val­ue of a cus­tomer tells you how long a par­tic­u­lar cus­tomer has been with your busi­ness. With this num­ber, you can see how long a cus­tomer is stick­ing around and how much they’re spend­ing. It looks at the long-term picture—not just how much that cus­tomer spent at once.

Know­ing the aver­age life­time val­ue of a cus­tomer can tell you if your mar­ket­ing is doing a good job of tar­get­ing the right indi­vid­u­als. In an ide­al world, you’ll con­vert a cus­tomer one time, and they’ll keep com­ing back. If your aver­age cus­tomer life­time val­ue is high, this tells you you’re doing a good job.

Focus­ing on cus­tomer life­time val­ue can also help direct your mar­ket­ing strat­e­gy to focus on con­vert­ing more repeat cus­tomers than just new cus­tomers. By invest­ing in attract­ing those who are already famil­iar with your brand, you can spend less to get their atten­tion, sav­ing your busi­ness mon­ey.

The Importance Of Focusing On Long-Term ROI 

As an entre­pre­neur under pres­sure, you may feel like you need to sell right now. Unfor­tu­nate­ly, if you’re only focus­ing on clos­ing a deal, it can be dif­fi­cult to grow. Rather than treat­ing your mar­ket­ing like a sprint, you need to treat it like an ultra­ma­rathon.

By focus­ing on long-term ROI, you rec­og­nize that growth should be constant—even if it means mov­ing at a bit of a slow­er pace. By invest­ing in mar­ket­ing cam­paigns that help boost your aver­age cus­tomer life­time val­ue, you’re invest­ing in long-term rela­tion­ships with cus­tomers and clients who care about you. Also, in the process, you are build­ing a strong brand whose equi­ty will be worth a lot when it comes time to exit.

Don’t get caught up in just mea­sur­ing con­ver­sion rates and sales num­bers. While they can be impor­tant to your busi­ness, espe­cial­ly when you’re just start­ing out, long-term met­rics paint a more impor­tant sto­ry. Focus on ROI that helps your busi­ness grow and build a strong brand pres­ence—not just close a short-term sale.

SOURCE: Forbes