Understanding your ROI

September 20, 2022

As an entrepreneur, you might have heard about the importance of digital marketing. While the industry's buzzwords like SEO and social media marketing can sound tempting to invest in, these do not give you a clear picture of the results until measured in terms of ROI.


An ideal way to analyze your digital investment to overall performance is by calculating return on investment (ROI). You can always hire a
professional digital marketing expert to help you ascertain your business’s digital marketing needs and formulate strategies that enable you to achieve the desired results. 


Listed below are a few essential metrics to help you understand their significance in the calculation of ROI in marketing. However, remember that most of these metrics are not direct inputs for the computation of ROI; they simply help you acknowledge whether your digital marketing campaigns are result-driven or not.

Website Visitors

Website visitors indicate the number of people that visit your business's website every month. This metric is critical to understanding the relevance of your web pages against the traffic it attracts. Wondering how to calculate organic, paid, or unique visitors?


You can easily track your company's website performance and its marketing campaigns by using Google Analytics. It allows you to see a categoric bifurcation of your traffic source — paid, organic, unique, or social.

Cost Per Lead (CPL)

Cost Per Lead/ Conversion indicates whether your digital marketing campaigns are profitable to your business. It is the cost that your company spends to acquire a prospect who shows a keen interest in your products and service offerings. This performance metric measures the paid traffic of your website. Here are the two ways to calculate CPL:

  • Through AdWords, or
  • Divide the number of leads by the cost of the ad for a given period. 


However, for organic leads, the calculation is different as you do not pay on a per-lead basis.

Cost Per Click (CPC)

Cost Per Click is the price your company pays when viewers click on your pay-per-click ad. To calculate your CPC, divide your overall cost of clicks for a particular period by the number of clicks you received. That is:


The total cost of clicks / Amount of clicks received = Cost Per Click.


So, if you want to
achieve a positive ROI, ensure that the leads acquired by clicks are more than their CPC.

Cost Per Acquisition (CPA)

The cost per acquisition is the amount businesses pay to acquire an actual customer rather than a lead. You can easily calculate your CPA by dividing your total digital marketing spend by your number of acquired customers. That is:


Total marketing spend / number of acquired customers = Cost Per Acquisition.

Customer Lifetime Value (CLV)

Customer lifetime value indicates how much your targeted audience benefits from your business. This metric is critical to calculating the projected ROI of your digital marketing efforts. 


To measure CLV, you must multiply the average annual income of your targeted customer by the average number of years your customer will potentially engage with your business. Then, deduct this amount from the single customer acquisition cost to obtain your customer's lifetime value.

Lead-To-Close Ratio (LTCR)

The lead-to-close ratio shows the percentage of your closed leads. This metric indicates that your leads are effective and sales are efficient, further helping you project your digital marketing ROI. To compute your company's LTCR, divide the total number of leads by the number of closed leads.

About us

Look no further than VFR Direct, LLC if you need top-notch digital marketing solutions for your brand. We believe every marketing project is unique; therefore, we approach each challenge with fresh energy and inputs to offer you the best results. Our services include Google Ads, SEO, listings, Facebook Ads, social posting, content, and website development. For more details, call us at (480) 744-1446 or govfrdirect@gmail.com. You can also schedule a free 1-on-1 consultation with our specialist or shoot us a message on our contact form!

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