Return on investment (ROI) is an essential metric for any business. However, many businesses make the mistake of solely measuring ROI against their budget. While budget is an important factor, there is much more to calculating ROI than that.
Budgets can be unrealistic, incomplete, or inaccurate, skewing the ROI calculation. For example, if a business sets a budget for a marketing campaign that is too low, it may not be able to reach the target audience, resulting in a low financial ROI. On the other hand, if a business sets a budget that is too high, it may overspend on the campaign, resulting in a low financial ROI due to excessive costs.
Let’s think about time as an investment
Another way to calculate ROI is to think about time. Here, the "investment" refers to the amount of time spent on the tactic, and you can consider your gains from investment as the benefits or returns obtained from that.
Let's say you spent 10 hours working on a blog post and then organically shared it on social media channels. Financially speaking, you’ve spent zero dollars. However, that doesn’t mean you can’t evaluate.
After publishing the post, you noticed a significant increase in website traffic, with 500 new visitors in the first week. Additionally, the post generated 10 new leads for your business, which you estimate to be worth $100 each. You can also see that the post received a lot of engagement on social media, with lots of shares and comments from your target audience.
When measuring the ROI of your time, it's not just about the tangible financial gains but also the intangible benefits that contribute to your business's growth and visibility.
Know what you’re trying to accomplish
To calculate ROI for time, it's important to first define your goals. What do you hope to achieve by investing your time in a particular marketing tactic? For example, if you're writing a blog post, your goal might be to drive more traffic to your website, generate leads, or establish yourself as a thought leader.
Once you have your goals in mind, you can begin tracking the results of your efforts. This might include monitoring website traffic before and after publishing the blog post, tracking new leads that come in as a result of the post, or keeping an eye on social media engagement metrics.
Measuring ROI for time can be tricky
Calculating ROI for time can be more challenging than for money investments, as the benefits may be more difficult to quantify and assign value. However, by estimating the value of the benefits and comparing them to the time investment, you can still get a good sense of whether your time was well spent and if the activity was worthwhile. Remember to keep track of your results over time (month over month and year over year) and continually use that information to improve your strategies and tactics. Make that data meaningful! Use that information to move forward.
Determining ROI for time investments can be incredibly valuable, especially for individuals and small businesses who may not have a lot of extra cash to invest in super-expensive marketing campaigns or other resources. However, by investing time in certain tactics, you can still see a return in the form of improved business outcomes.
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