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Measuring and evaluating marketing effectiveness is essential for businesses to know what is the appropriate Marketing campaign for your company. From there, you can propose adjustments and replace plans to suit the actual situation. Below, B.Spirit gives some criteria to evaluate the effectiveness of marketing activities commonly used in your firm. 

1. Return on investment (ROI)

ROI is the most common formula used to calculate the efficiency and value of an investment. When calculating ROI, your company can determine how to use your capital, change the division for factors to increase the effective use of capital.

From determining ROI index, you can easily predict and measure the effectiveness of capital investment as well as compare ROI across each campaign to improve accuracy in the process of estimating budget for other marketing campaigns in the future.

Formula: 

ROI = (Net Profit/ Investment Cost) x 100

2. Cost per acquisition (CPA) 

CPA is a formula that helps measure how much a business must pay to convert a potential customer into a revenue-generating customer for the business.

CPA allows your business to control advertising costs for specific marketing goals with the activities of their advertising campaigns. Advertising payments are based on completed activities, CPA help track, control and maximize return on investment across different marketing channels.

Formula:

CPA = Cost of Ads/ Conversions

3. Cost Per Lead (CPL) 

CPL is one of the KPIs for a marketing campaign, businesses pay for each special action that customers take to benefit the business. 

CPL represents the cost per lead. However, depending on each marketing campaign that collects a different number of leads, CPL only shows how much money your business has to spend to get 1 lead approach.

Formula:

CPL = Advertising Cost/ Number of Leads

4. Customer Retention Rate (CRR) 

CRR is a measure of the number of old customers returning to buy and use the business’s services or the customer retention rate of the business in a certain period of time.

Acquiring new customers is mỏe expensive than retaining existing ones. Therefore, determining the level of customer loyalty to the business helps to improve business strategy as well as continue to develop strengths and correct inadequacies in products and services.

Formula: 

CRR = [Number of customers at the end of the period / (Number of new customers in the period - Number of customers at the beginning of the period)] x 100%

5. Return on Advertising Spend (ROAS)

ROAS is the return based on revenue on ad spend. This is a tool used to measure the profit generated from advertising activities, used to evaluate the performance of marketing campaigns. While ROI provides an overview of your business, ROAS helps to evaluate activities in detail according to each deployed marketing network. 

Formula: 

ROAS = Ad Revenue/ Ad Source Cost

6. Customer Lifetime Value (CLV)

CLV is the total profit earned by customers during the time they buy or use your products/ services, which is used as an indicator of the customer’s return to your business, thereby helping you determine which customers are worth investing in and exploiting. Customers with high lifecycle value are considered loyal customers and businesses often prioritize this group of customers because they bring long-term and sustainable profits to the business.

Formula: 

CLV = (Average Monthly Transactions x Average Value of Orders) x Average Profit Margin x Average Customer Lifetime

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