ROI describes the quantity of customers or revenue brought in by deploying a particular marketing technique, whether that's an old school billboard or social media advertising. The problem with measuring ROI, however, is that some modes of marketing are virtually impossible to track. How can you know how many people have come to your business because of a given ad campaign?
The Challenge of Tracking ROI
Tracking ROI is a challenge for several reasons. One of the first difficulties in terms of tracking ROI is that customers simply aren't conscious of the specific campaigns that directed them to your business. As we'll see, this can pose a big problem.
One form this lack of attention to marketing may take is inaccurate answers during ROI data collection. When surveyed about the marketing efforts that drew them in, consumer answers may even include modes of marketing your business doesn't use. So, while you should always be asking how your customers found you, as Mark Britton, founder and CEO of Avvo.com points out, don't expect these answers to be accurate. In fact, bank on this question providing utterly skewed ROI statistics.
Another difficulty with tracking ROI is that certain modes of marketing have no associated metrics that can be collected beyond consumer surveys. A billboard, for example, can't report on how many drivers going by actually take in the ad. The best the billboard can do is offer an estimate of how many people drive by on a given day. That's not much of a data metric.
On the other hand, digital inbound marketing, for example, may demonstrate how many people come to your site because of online ads by recording the click-rate. However, these statistics don't measure conversion rates, which are the more important value when gauging ROI. If those visitors only spend ten seconds on the site before leaving, those statistics aren't worth much. At the same time, Jon Miller explains, many people whose first exposure comes from this kind of inbound marketing will ultimately convert via a search engine result or direct URL entry.
The Inside Scoop on Promo Codes
If ROI is so difficult to measure, how can promo codes help improve your company's measurements? The real key to using promo codes is that they create a direct link between a particular marketing campaign and customer conversion. Rather than just measuring inbound traffic from an ad, then, promo codes track people who are actually engaging with your company.
Promo codes function to track ROI because unique codes can be affiliated with each marketing program. When your company tracks the use of those promo codes, Spencer Powell explains, you can measure the ROI of a given campaign. Certainly some people brought in by a particular ad may overlook the associated promo code, but especially if there is a benefit associated with the code, most will enter it. Simply paying attention to which codes are entered most often will give you a sense of what modes of marketing are most effective.
It's important not to associate promo codes with losses or giving things away. As the DraftKings example below demonstrates, the increased conversion rate associated with the use of promo codes makes them ultimately a boon to business. Sure, promo codes may offer a discount or freebie, but they have the potential to create loyal customers as well. Isn't that what all businesses want?
At the end of the day, loyalty is the goal of marketing campaigns. You don't just want to bring in customers; you want them to stay. Promo codes can make that happen, while giving you a way to measure your success as an ROI value.
DraftKings and Promo Code Incentives
One company that demonstrates the effectiveness of promo codes for tracking marketing success is DraftKings. In fact, DraftKings' work with promo codes demonstrates their dual effectiveness for tracking ROI, as well as facilitating customer conversion. They accomplish this by offering promo codes that also disburse matching funds based on customer gaming deposits and ongoing game play. As Daily Fantasy Cafe points out, the high bonuses associated with DraftKings' promo codes make gamers more likely to enter the code, increasing the accuracy of ROI measurements.
The key to measuring ROI using promo codes, as the DraftKings' strategy demonstrates, is using different codes in different markets. As such, DraftKings uses different codes on different websites, and then other codes on the radio, television, or in print advertising. This means that DraftKings can measure how many users were directed to their site by Daily Fantasy Cafe because those customers enter "CAFE" as their promo code, while users directed to the site via another fantasy sports page will enter a different promo code.
DraftKings uses a similar practice for radio, TV, and print advertising. A particular radio station will have a unique code, allowing DraftKings to measure the ROI for that specific market. It isn't enough just to give each medium its own code, but rather each individual advertising venue needs a unique promo code to differentiate between them. This allows your company to evaluate which markets are the most lucrative and eliminate those that are a waste of money.
The other lesson to be learned from DraftKings' success with using promo codes is that incentives are important, or at the very least, valuable. Because of its industry, DraftKings has the ability to extend the disbursement of bonuses associated with a promo code, rather than offering the bonus all at once. This makes it more likely that gamers on the site will return, creating long-term conversion, rather than a temporary buy-in based on the promotion. While this method doesn't apply in many cases, even a one-time bonus will increase conversion rates over companies with no promotional efforts.
Using Promo Codes for Your Business
If you've been having a difficult time establishing ROI measurements for your company, promo codes may be the way to go. Promo codes are a great method for measuring the otherwise elusive effectiveness of marketing campaigns, particularly because they can be customized to suit the needs of your business. As such, each new campaign or market can feature a new code to help distinguish which methods or venues are the most profitable.