Let’s talk a little bit about ROI—those three little letters that seem really daunting when you’re in the world of marketing and fundraising. At Firespring, we understand that you might have a board or a boss or a CEO that is hawking you for the ROI or the results of every marketing and fundraising tactic that you put out into the market.
Whether that’s an email, an event or a direct mailer, they’re asking you, “What are the results? What are you seeing? Why are we even doing marketing?”
You might even have a CEO or a board member that doesn’t believe in marketing.
I’m here to tell you that ROI doesn’t have to be as intimidating as it seems. So, let’s begin with what ROI really is. Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of a spend or compare the efficiency of a number of different investments.
Intimidating, right? Nah.
There are a couple of quick tricks that you can implement into your planning and into your budgeting that will really take the fear out of those three little letters.
Why setting KPIs will be a game-changer for your organization.
So let’s start with number one. I’d like to introduce you to three other letters that you’re going to love: KPI. That’s key performance indicators.
Every time that you do a marketing tactic, whether that’s a large campaign on social media, a direct mailer or an event, you need to have these key performance indicators identified. The simplest way to create KPIs is to look at your goals and ask yourself, “What metrics do I need to hit in order for these goals to come true?”
If your goal is to get 100 new followers on social media or obtain 50 new donors, or get 250 people to show up to your event, then you’re going to have KPIs that tie directly into them. These KPIs are not the goals, however. These are metrics that show you’re working toward the goals. So for example, with your social media posts, the goal might be increased engagement, so your KPIs might be looking to have a reach of 10,000 individuals or 5,000 impressions in a given month. The reasoning behind the KPIs is to show you’re on the right track to hit your goals and therefore hit your ROI.
Ensure that each marketing or fundraising tactic receives its own ROI.
The second and arguably the most important aspect is that every tactic should have a different ROI calculation for your marketing and fundraising budget. The impact that you’re going to create on an awareness or an education effort, like a social media post, or an activation toolkit, or even a direct mailer, is going to have a much different impact on your bottom line than an event or a fundraising day, like Giving Tuesday.
If you look at them the exact same way, you’re going to be disappointed. And you might say, “Hey, social media is not important, or we shouldn’t do direct mail, or we shouldn’t do this item.”
But at the end of the day, each one of them should have different goals.
If the goal is increased donations, then you need to look at what that ROI percentage needs to be as part of your overall goal.
But if the goal is awareness and education, then you might have to be comfortable with spending a little bit more just for that reach.
How to apply an ROI percentage to your budget at the beginning of the year.
The last thing is about your budget itself. Whether your budget is $1,000, $100,000 or $1,000,000, it’s important that you know where you’re going to spend your money and what results you’re going to create.
So one of the recommendations that I always give to nonprofits and businesses alike is that you should be able to track 70–80% of your marketing and fundraising budget back into your bottom line. Which means, you need to know exactly where those dollars are going and what impact they’re creating. That leaves 20–30% for a little bit of experimentation or unique efforts.
This gives you room if you want to try an event that you’ve never done before or some experiential marketing. That’s where you can have a little bit of fun and try to create something new, but that 70–80% is essential. This way, you can go and present to that board member or to the board as a whole, or to your CEO and say, “Hey, this is what we’re doing and here are the results it’s creating.”
When you think about ROI, instead of thinking about it as a scary thing, think about it as an opportunity to get creative and experimental when it comes to your presentations to your boss or to your board.
Finish with a challenge.
So your challenge for today is when you start on a marketing campaign or a new marketing tactic, set the KPIs and understand what the ROI is within the goal. Look at it and ask yourself and your team, “Is this an awareness play or is this a fundraising play?” and build that percentage from there.
And if you are looking for assistance for building your ROI, sign up for a free and virtual 30-minute strategy session and we’ll show you the way.