Ecommerce ROI Unleashed: How Fractional CMOs Turn Marketing Into Profit!

Profit is a core concern of any business. Knowing what does and does not help with growth is a crucial skill for business owners. Learning to measure the return on investment (ROI) brought by marketing campaigns is equally crucial. Hiring a fractional chief marketing officer (FCMO) can simultaneously solve both concerns.

Here is a look at how an eCommerce fractional CMO unlocks your business and ROI potential:

• Why measuring marketing ROI is important for business.
• How to calculate your eCommerce marketing plan’s ROI.
• Three ways an eCommerce fractional CMO boosts ROI.

There is a lot to discuss, so get ready to take notes.

Let’s go!

Wondering what a Fractional CMO can do for your business? Watch this video below.

The Importance of Measuring Ecommerce Marketing ROI

Owning a business comes with plenty of innate financial risks. Given that money is a basic requirement, you must fund marketing as well as other costs to keep the business running. Many top eCommerce companies also rely on paid ads, which require large budgets.

For these reasons, an eCommerce business owner needs a good grasp on how their money flows and whether their investments show ROI. This is important as any profits that a business gains directly affect its ability to fund future marketing campaigns.

In addition, tracking marketing analytics and expenditures is also intrinsic to owning a business. The goal is to get the most out of the data to use it in every way possible. It accounts for and affects your marketing budget and all of your overhead expenses.

Calculating the ROI of marketing strategies, such as search engine optimization (SEO), helps to paint a more holistic picture of your success (or failure). However, this goes hand-in-hand with setting realistic goals. You should not, for instance, expect ads to return customers at a 1:1 ratio. 

Conversion rates are typically low for a variety of reasons. To provide some perspective, eCommerce shoppers abandon their carts at a high rate on mobile (84%) and desktop (72%). Because of the gap between conversions, it is vital to maximize how much you spend on each one.

How To Derive ROI for Ecommerce Marketing Campaigns

Calculating ROI in eCommerce involves several steps, each crucial for understanding the effectiveness of your marketing campaigns. Here's the formula for calculating ROI and a simplified guide to computing ROI:

1. Collect Revenue Data: Use Google Analytics or your eCommerce platform to find the total revenue generated by your business or specific campaign. The formula for revenue is straightforward:

Revenue = Quantity Sold x Price

2. Sum Up Expenses: Add up all the costs associated with running your business, including website maintenance, staff salaries, and advertising.

Expense = Rent + Electronics + Payroll + Insurance + Utilities + Marketing + Advertising

3. Calculate Net Profit: Subtract your total expenses from your total revenue to get the net profit for a specific period.

Net Profit = Revenue - Expenses

4. Derive ROI: Finally, calculate ROI by dividing the net profit by the initial marketing investment and multiplying by 100.

ROI = (Net Profit / Initial Investment) x 100

As an example, let us say that you run a pet supplies eCommerce business. In July, you invested $700 in a targeted Facebook ad campaign promoting a new line of organic dog food. Here are how the numbers break down:

• Revenue from Facebook Campaign: $3,000 (100 bags of organic dog food at $30 each)
• Total Revenue for July: $7,000 (including $3,000 from the Facebook campaign)
• Expenses: $4,870 (Rent $700 + Inventory $3,000 + Shopify $25 + Insurance $45 + Utilities $400 + Marketing $700)
• Net Profit from Facebook Campaign: $2,300 ($3,000 - $700)
• Overall Net Profit for July: $2,130 ($7,000 - $4,870)
• ROI from Facebook Campaign: 328% ($2,300 / $700 x 100)

In this example, the $700 Facebook ad campaign leads to $3,000 in revenue, boosting the month's net profit and ROI. This showcases how a fractional CMO's targeted marketing can yield profit.

Three Ways Hiring an Ecommerce Fractional CMO Raises ROI

Raising ROI in eCommerce is challenging without a skilled team. Many small businesses cannot afford a full marketing team or CMO. Ecommerce marketing services offer a cost-effective solution, providing the expertise of a fractional CMO to elevate your business and ROI.

     1. Raising Ecommerce ROI with Thorough Strategic Planning

The primary job of a fractional CMO is to assess the business’s current standing and use research methods to address issues found. Digital marketing experts still cite content and SEO as the top drivers of web traffic. An experienced fractional CMO, therefore, looks at content as one solution.

Many eCommerce businesses also invest in social media and influencer marketing as a means of driving sales. In this case, the FCMO directs the appropriate department to conduct further research into social platforms, after which they decide on the best ones for the business.

An eCommerce fractional CMO does more than just research, approve, and delegate marketing strategies. If their client’s team lacks particular skills, they also build a fractional marketing team by tapping into their network. This way, they ensure that strategies yield the intended positive results.

     2. Build Effective Campaigns with Data-Driven Methodologies

Ecommerce fractional CMOs know from experience that data analysis is the best method to reliably predict ROI. This is especially true of predictive and prescriptive analysis, which helps pinpoint top-selling products. This approach has the added benefit of identifying your core market segment.

For example, a sporting goods eCommerce store hires a fractional CMO to update its marketing strategy. By running sales data through descriptive analysis, they learn that fishing gear sales spiked last spring. A diagnostic analysis tells them that this was due to trending tilapia recipes.

The first step that an FCMO takes to perform analysis is to ensure that Google Analytics is fully integrated into your eCommerce platform. This platform simplifies the tracking of sales, revenue, and growth. A fractional CMO also trains marketing staff to manage these tasks and work without supervision. 

     3. Personalize Marketing Strategies for Each Market Segment

As the leader of marketing, a CMO is responsible for dictating the direction of strategies, which includes identifying key markets for the business. A fractional CMO conducts an in-depth SWOT analysis to discover new opportunities and then leverage the business’s strengths through strategies.

The same marketing strategy is not equally effective across all parts of your target market, so an effective leader must be methodical. For example, a pet supplies eCommerce business enlists eCommerce marketing services to boost sales. First, they segment buyers based on past sales.

It soon becomes clear that the business’s target market consists mostly of dog and cat owners. An eCommerce fractional CMO knows genuine connection is what builds ROI. For this reason, they craft ads and draft content strategies that specifically appeal to these target demographics.

Summing Up

Every eCommerce business owner wants to see high returns on their platform, but not many have the know-how to achieve it. They may not have the team or leadership to steer their business in the right direction. Hiring eCommerce marketing services can change that.

An eCommerce fractional CMO is the best choice for fixing a flawed marketing strategy and setting the business on a profitable course. Knowing how to correctly tie strategies into analytics data is a perfect example of how these experts contribute to the success of your eCommerce business.

Need help multiplying your eCommerce marketing ROI? Contact Digital Authority Partners (DAP) today to learn how we can help.