Return on engagement (ROE) is a metric used to measure the effectiveness of a company's customer engagement efforts. It represents the financial benefit that a company realizes from its investment in customer engagement activities such as customer support, marketing, and product development.
To calculate ROE for a SaaS company, you can use the following formula:
ROE = (Revenue increase from customer engagement activities - Cost of customer engagement activities) / Cost of customer engagement activities
Here's an example:
- Let's say a SaaS company invests $10,000 in customer engagement activities, such as customer support, marketing, and product development.
- As a result of these efforts, the company experiences an increase in revenue of $15,000.
- To calculate the ROE, divide the revenue increase ($15,000) by the cost of customer engagement activities ($10,000) to get 1.5.
So, the ROE for this SaaS company would be 1.5, meaning the company received a return of 1.5 times the cost of customer engagement activities. The higher the ROE, the more effective the company's customer engagement efforts have been.
As a digital marketer, I understand the importance of measuring the success of a campaign beyond the number of clicks it generates. While clicks provide a good indication of the initial interest a user has in a campaign, it's the engagement that follows that truly determines its success. This is where return on engagement comes into play. In this article, I'll explain what return on engagement is, why it's important, and how to measure it.
Introduction to Return on Engagement
Understanding Engagement Metrics
To fully understand ROE, it's important to understand the different engagement metrics that make it up. Some of the most common engagement metrics include:
- Time Spent on Site: The amount of time a user spends on a website or landing page.
- Social Media Interactions: The number of likes, comments, and shares a post receives on social media.
- Email Opens: The number of users who open an email.
- Video Views: The number of views a video receives on a website or social media platform.
- Form Submissions: The number of users who fill out a form on a website or landing page.
By tracking these engagement metrics, marketers can get a better idea of how engaged users are with their campaigns and make adjustments accordingly.
Benefits of Measuring Return on Engagement
The benefits of measuring ROE are numerous. First and foremost, it provides a more accurate picture of a campaign's success. By taking into account engagement metrics, marketers can see how users are interacting with their campaigns beyond just clicking on an ad. This allows them to make adjustments to their campaigns that can improve engagement and, ultimately, drive more conversions.
Measuring ROE also allows marketers to better understand their target audience. By tracking engagement metrics, marketers can see which types of content are resonating with their audience and adjust their campaigns accordingly. This can help them create more effective campaigns in the future.
How to Calculate Return on Engagement
Calculating ROE can be a bit more complex than just looking at clicks. To calculate ROE, you'll need to track engagement metrics and assign a value to each one. For example, you might assign a value of $0.25 to each social media interaction and $0.50 to each minute spent on a website. Once you've assigned values to each engagement metric, you can add them up to get a total ROE value.
Examples of Successful Return on Engagement Strategies
There are many examples of successful ROE strategies out there. One great example is Nike's "You Can't Stop Us" campaign. This campaign featured a video that showed athletes from various sports and backgrounds coming together to overcome adversity. The video was widely shared on social media and received over 60 million views on YouTube alone. By tracking engagement metrics, Nike was able to see how engaged users were with the campaign and make adjustments accordingly.
Another example is Airbnb's "Live Anywhere on Airbnb" campaign. This campaign encouraged users to try living in a different location for a month using Airbnb. By tracking engagement metrics, Airbnb was able to see how many users were interested in the campaign and adjust their marketing accordingly. The campaign was a huge success, generating over 20,000 bookings in just one month.
Tools for Measuring Return on Engagement
There are many tools available for measuring ROE. Some popular tools include Google Analytics, Hootsuite, and Hubspot. These tools allow marketers to track engagement metrics and assign values to each one. They also provide insights into how users are interacting with campaigns and allow marketers to make adjustments accordingly.
Common Challenges with Measuring Return on Engagement
Measuring ROE can be challenging for a number of reasons. One common challenge is determining the value of each engagement metric. Assigning a value to each metric can be subjective and may vary depending on the campaign. Another challenge is tracking engagement metrics across different platforms. For example, tracking social media interactions can be difficult if a campaign is being run across multiple platforms.
Implementing a Return on Engagement Strategy
Implementing a ROE strategy starts with setting goals. What do you want to achieve with your campaign? Once you've set your goals, you can start tracking engagement metrics and assigning values to each one. This will allow you to calculate your ROE and make adjustments to your campaign as needed.
Best Practices for Improving Return on Engagement
There are several best practices that can help improve ROE. One is to focus on creating quality content that resonates with your target audience. Another is to optimize your website or landing page to keep users engaged. This might include adding videos or interactive elements. Finally, it's important to track engagement metrics and make adjustments to your campaign as needed.
Measuring return on engagement is essential in today's digital landscape. By tracking engagement metrics and assigning a value to each one, marketers can get a more accurate picture of a campaign's success. This allows them to make adjustments to their campaigns that can drive more conversions and improve engagement. With the right tools and strategies, measuring ROE can be a powerful way to improve the effectiveness of your marketing campaigns.