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Tracking ROI: how to bridge the gap between offline sales and online data
ROI, or return on investment, is a calculation that helps you take a step back from your business and understand the big picture: are you actually making money compared to how much you’re spending?
But when businesses have both an online store and a physical presence, understanding the full picture of their ROI involves tracing offline sales back to online data.
To accurately calculate ROI, you need to know how your online presence impacts your offline sales. But you can only understand the full impact of your digital marketing if you take into account the ROPO effect—‘research online, purchase offline.’
What’s more, if you can link what you know about your online customers’ buying behavior and demographics to your in-store customers—which is now possible thanks to analytics and product experience (PX) insights software—then you’ll understand your whole customer base.
After all, the secret to increasing your ROI is knowing what your customers want and need from you—and delivering it.
This article explains what ROI is, how to calculate it, and gives you seven ways to trace offline sales to online data—which is so often the missing piece of the puzzle when businesses calculate their overall ROI figure.
Understand what your customers want → increase ROI
Hotjar helps you gather reliable insights about your online customers and their shopping habits.
ROI 101: what is it exactly?
ROI shows how much money you make from your business, relative to how much you invest to run it, including the costs of manufacturing your product and bringing it to market.
You can also create segmented ROI calculations to compare various aspects of your business. For example, you could calculate the different ROI on each of your products, your sales outlets, or your marketing campaigns to see which is delivering the best profit. This helps you make informed decisions about where to take your advertising next or which product lines to expand.
How to measure ROI in your ecommerce business
The formula for calculating ROI, in its simplest form, is:
ROI = (income - investment) / investment x 100
For example, if you spent $100 maintaining your online store, manufacturing products and running ads, then made $120 worth of sales, you’d be looking at an ROI of 20%.
($120 - $100) / $100 x 100
ROI = 20%
💡Calculating the ROI of different marketing campaigns💡
One of the most useful applications of ROI in ecommerce is that it helps you understand which marketing campaigns are most profitable. To do this, you first need to know how many $ of sales a particular channel brought in. (This information is usually available on the analytics tab of your ad platform, or your ecommerce store provider.)
You also need to calculate a more specific ‘total investment’ figure: scale down your overhead costs to cover only the number of products you sold via this one marketing channel, and exclude any money you spent on other marketing channels.
To get a full picture of the ROI of a marketing campaign, you also need to factor in a cheeky little metric called Customer Lifetime Value (CLV). This is the total amount a customer is likely to spend at your store in the course of their ‘lifetime’ as a customer—not just the first purchase they make after engaging with a particular marketing campaign.
For example, perhaps customers who find you via a highly targeted social media ad tend to turn into repeat buyers, and purchase an average of $1,000 worth of products in their ‘lifetime.’ Or perhaps customers who find you via organic search usually only buy from you once, with an average order value of $200. Factoring CLV into your ROI calculations helps you understand which marketing channels are likely to generate the most profit in the long term.
LTV at ConvertKit is over $1800 (Source: convertkit.baremetrics.com)
For stores with a physical outlet as well as a website, calculating the ROI of your online presence poses an extra challenge. When calculating the profitability of your online shop, how many of your in-store purchases should you include in the ‘income’ figure?
Understanding the relationship between your offline sales and your customers’ online activity isn’t just helpful for calculating ROI—it can also help you increase it. The data you gather about your customers online allows you to understand how to meet their needs even better, and, therefore, make more sales.
Here’s how to tie your offline sales back to online data:
7 ways to attribute offline sales to online data
There are a handful of effective ways to tell whether customers walked through the door of your store because they visited your website. In some cases, you can even tell which digital marketing campaign first caught their eye. Here’s how:
1. Offer an online voucher redeemable in-store
To gain a picture of how many of your in-store customers checked you out online first, create an online voucher or discount code that’s only redeemable in-store. If you use email marketing, send the voucher to the customers on your mailing list. If not, create a separate landing page for it, and add a banner to all your pages that direct visitors to the voucher.
Measure the use of these vouchers in-store to get a realistic sense of how many sales you generate as a result of your online campaigns. This method will only help you account for people who visited your website since you started the experiment, but provides a figure you can use to make an informed estimate.
💡Pro tip: if you chose to create a voucher page, use a tool like Hotjar’s Heatmaps to see what elements customers click on the page, and what they skip past. For example, with scroll maps, you can see if your shoppers tend to scroll down to find ‘store locations’ information, and know there’s a good chance these customers are open to buying from you in person.
Heatmaps show you where customers click and scroll on your pages, providing unexpected insights into how users experience your ecommerce store.
2. Ask your customers about their buying habits
When you want to learn something about your customers, don’t underestimate the power of asking them. Use a tool like Hotjar’s Surveys to add a simple questionnaire to your product pages, asking your customers if they plan to buy in-store, or if they have in the past. You can also ask them how they heard about you in the first place, which helps you map out your customer journey.
Alternatively, you can do a manual version of this. Brief your sales staff to ask customers where they first heard about your business, and whether they used your site. If your till is on a tablet or screen, add a short questionnaire to the checkout process. If not, simply ask your staff to note down their responses, and log the data in a CRM later on.
Don’t guess how your customers found you. Ask them.
Hotjar’s Surveys help you gain valuable insights into your customers’ shopping habits.
3. Create a loyalty program
A staggering 90% of companies offer loyalty programs—they help business owners boost customer retention by building a picture of customers' purchase frequency and how long they keep shopping with them—which is essential for calculating CLV, and, as a result, ROI.
Promise a small discount or exclusive offers to website visitors who register for an account with you. Brief your sales staff to ask customers shopping in-store or over the phone whether they’re signed up, and if they are, you’ll have a record of their email address, so you can calculate how many customers saw your products online before engaging in an analog way.
4. Use Google Analytics’ ‘store visits’ feature
Many online store owners use Google Analytics (GA) as a primary tool to track sales. What’s more, there’s a dedicated GA feature to help users attribute the offline ROI of a business’ online presence. It calculates the number of customers who visited your physical store within thirty days of using your site.
GA’s ‘store visits’ is a useful tool to judge the in-store effects of ad campaigns you run on search engines and social media. For example, if you drive clickthrough from your pay-per-click ads to a dedicated landing page, the Google Analytics dashboard will show you how many of this page’s visitors went on to visit your brick-and-mortar store—so you can trace these shoppers directly back to that campaign.
Pro tip: GA’s store visits feature isn’t totally fool-proof—it only works for customers who agree to share their location history, and isn’t available in every region or industry.
5. Map out your customer journey
There’s some (informed) guesswork involved in connecting your online presence to in-store sales. Once you use the methods above to gather tangible data, one technique to structure your guesswork is to create a customer journey map—a visual representation of the various touchpoints and interactions that brought customers through the door.
Being able to visualize this path helps you understand pain points or bottlenecks that could prevent customers from buying your product. It also gives you an overview that connects the demographic information you have on your online customers, to what you know about their in-person shopping behavior.
For example, a customer's journey may show that someone saw an ad for your rollerskates on social media, which you created to target 16-21-year-olds living in Venice Beach, California. They then clicked through to your website, and finally visited your store to try on a few pairs and make a purchase. You might not know for certain that the same person who viewed your ad is the one who bought your skates in-store. But if you’ve got data to suggest that these particular ads lead to more in-store sales, then the guess is an educated one.
6. Use call-tracking software
If you’re trying to connect sales calls to online data rather than store visits, there’s a whole world of analytics options available to you. First, use call-tracking software, like CallRail and CloudTalk, to log call attribution. These tools assign a unique number to different phone-based marketing campaigns, then automatically log every time each campaign makes the phone ring. They keep the data in an analytics dashboard for you to review, so you can tell if the person calling your business heard about you from your website or a Facebook campaign.
What’s more, call-tracking software typically provides information about the caller’s location, whether they rang previously, and how long they stayed on the line. Log this data into a CRM, along with the information you have on your online store’s customers, to build a more complete picture of your customer base—including where your customers live, how often they buy from you, and what time they tend to shop.
7. Compare offline sales figures with customer insights
To understand what your customers want and need, review qualitative data—such as insights about how they behave on your online shop—as well as quantitative data—like how many of them are visiting and buying from your brick-and-mortar store. For example, if you notice that you didn’t sell much of a particular item in-store, investigate how customers interact with it online. You may need to tweak something on your website to make its page easier to find or display product information more clearly, which helps you boost offline sales.
To understand how customers interact with your product pages, use a tool like Hotjar Recordings and watch videos of user sessions to see how their mouse moved across the page and where they decided to click. You might, for instance, discover that users are rage-clicking a broken call to action (CTA), which you wanted to link to a product page, and learn that the reason you sold less of that product was because of a broken link.
Want to understand how customers behave on your site?
Hotjar’s Recordings let you see the customer journey through their eyes.
Calculating ROI is the first step to increasing it
Is your online presence bringing customers through the door of your shop? It almost certainly is, since more than 80% of online ads drastically enhance offline sales. What’s more, being able to check whether that statistic holds true for your website isn’t the logistical nightmare it might sound like at first.
Connecting offline sales to online data is essential for any business with both a digital and physical presence. It helps you understand the true business impact of all the noise you’re making on the internet, and which digital campaigns are working the hardest for you. It also helps you form a more complete picture of your customer base, so you can learn how to delight them—and increase your bottom line.