The key to determining the ROI of individual marketing campaigns is tracking customer behavior in response to those marketing activities.
Ideally, you want to track every customer at every touchpoint so you can determine the response to each marketing activity -- ads, mailings, etc. Companies that sell directly to customers have the best opportunity to track their customers' behavior. When you are in direct contact with a customer it's possible to know when and how every contact occurred.
But most companies sell through their distribution channel, which makes it very hard to know how each buyer was influenced by marketing and sales activities. Also, companies that use offline advertising and public relations to promote products have a hard time knowing the impact of their ads and stories on each customer.
Traditional offline media has always presented a challenge for marketers wanting to measure the value of their marketing, but direct marketing techniques can be used to track many customers. For example, people who respond to an ad immediately can be tracked using unique toll-free telephone numbers or URLs .
But we know that exposure to a company's prior ads helped a prospective customer move toward taking action. So how do we measure those exposures?
Sometimes you can determine if a customer was in the audience that was exposed to your earlier ads.
But when you can't get media exposure data for individual customers, you can apply reach and frequency math to the demographic segment the customer is in to estimate ad exposure.
This technique isn't just for consumer companies. Reach and frequency techniques can work for B-to-B marketers, too.
Many trade publications can tell you how much overlap they have with other publications in their market. Once you know the total subscriber base in your market segment you can calculate an estimate of how many of your ads were seen by each customer in that segment.
All customer tracking techniques take work to capture data, consolidate it into customer profiles, and apply sound analytical techniques. However, when marketing resources are tight this is the best way to have the highest ROI possible.