In my blog last week, we talked about return on marketing investment (ROMI) and how it can help you manage and prioritize your portfolio of marketing investments. Let’s just take this one small step further, actually a giant leap – a return on investment focus will help you prioritize so you can deliver results like a rockstar strategic marketer that operates with financial rigor.

Measuring marketing results is hard! Or is it?

It’s a wonderful thing to speak academically, but we need a practical way of measuring incremental revenue. While tallying the costs of any given marketing program is straightforward, gaining visibility to the impact on revenue can be more complicated.

How can we measure the incremental revenue due to any marketing program or changes to the e-Commerce website we may choose to implement? There are a number of revenue attribution models that attempt to allocate the value of the sale to the last marketing touch or the first marketing touch or even to spread things across multiple touches. These are mostly suited to B2B enterprise-type sales and can be harder to apply to the retail e-Commerce model.

A reliable method for measuring marketing ROI.

Fortunately, because the web is the greatest usability lab of all time, we can track everything we need to understand about return on investment in the online retail setting by leveraging ‘Treatment’ and ‘Control’ Groups. It’s a straightforward and accurate way to measure the effectiveness of any marketing program.

In a nutshell, with treatment and control groups, you compare the results from a “clean” control group with the treated group. By withholding the new marketing experience from a portion, say 10% of users, a clean baseline can be established from which to measure the incremental results of the new treatment. Assuming other sales and marketing influencers on our two groups are roughly equivalent, we can attribute the difference in results to the new treatment.

Using the chart below as an example, the red line represents revenue per visit (RPV) for the control group and the blue line represents RPV for the treated group. The treatments are working, meaning they are producing a positive return, whenever the blue line is above the red line.

increasing revenue lift

If we examine the summary table above, we can see that the treated group produced a positive 9% lift in the RPV column vs. the control group (or our baseline).

By leveraging control groups, you can measure almost any metric you can track such as: traffic, conversion rates, bounce rates, or average order values. I prefer the more direct measure of results – revenue, as our benchmark. We always want to increase engagement and loyalty and other measures of customer experience, but an unavoidable indicator of success for any retail business is revenue.

The Treatment and Control methodology can reveal the true ROI impact of any marketing program or investment on your e-commerce site such as:

  • 3rd party recommendation engines or trust badges
  • which message or copy is resonating with buyers
  • the potential results from implementing formative input of UX research
  • free shipping thresholds

Research shows that a majority of marketers struggle with how to forecast the revenue impact of their marketing programs. When you work towards understanding the expected revenue lift (or not) from the myriad of initiatives in your marketing mix, you’ll optimize marketing results. But perhaps more importantly, adopting a return on marketing investment mindset will put you in an elite group of strategic marketers who are welcome at the management table.