How to Calculate the ROI of a Beauty Marketing Campaign

So, you’ve launched a beauty marketing campaign.

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But how do you know if it was successful?

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One key way to determine this is through calculating ROI (Return On Investment).

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For a campaign to be a success, the benefits a business receives (the ‘return’) should be of significantly greater value than the investment in the campaign. The greater the return, the more successful the campaign.

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ROI is a crucial metric that helps brands determine how well their marketing strategies are performing and highlights the areas that need finetuning. And it’s an important tool for agencies to prove the worth of their work to clients.

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The concept of ROI will be familiar to many beauty marketers. But how exactly should you go about calculating the ROI of your beauty marketing campaigns?

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Let’s take a closer look.

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Define Your Metrics to Measure the ROI

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Working out how to measure ROI in marketing involves deciding how you’ll measure both the ‘investment’ and the ‘return’.

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The investment side of things is easier - it’s relatively simple to quantify the amount you spend on paid media, the cost of marketing tools, or team hours, for example.

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Measuring the return can be a little more complex.

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If a brand wants to work out the number of sales resulting from a campaign, they can choose to track the sales activity coming through certain campaign emails, for example.

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But what if a customer receives a campaign email promoting a specific product, is persuaded by it, but at a later time goes directly to the brand’s website to buy a product?

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A brand should consider conversion windows, including 3-month and 6-month conversion windows to get a better understanding of true ROI. This is especially important for luxury products that aren’t impulse purchases.

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Additionally, it’s worth measuring the leads a campaign generates, as a proportion of these will convert to later sales. These sales can be attributed to a campaign.

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However, initial sales and leads aren’t the only valuable metric brands may want to measure.

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Businesses may also see a successful ‘return’ in an increase of time spent on their website, levels of engagement on social media, customer lifetime value or brand perception.

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Some of these metrics may be hard to convert into currency for campaign ROI calculation. But they still represent real added value for a brand and should not be ignored when evaluating the overall success of a campaign.

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How To Measure Campaign Performance with ROI

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ROI compares the cost of a marketing campaign with the value it generates.

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A simple formula for a campaign’s ROI is:

(sales - cost of campaign) / cost of campaign

Cost of campaign will include:

Media costs

Platform costs

Product and fulfilment costs

The sales in this calculation should include both initial sales as well as additional sales generated by new leads. You can estimate these later, additional sales by using the formula:

number of leads x lead conversion rate x average sale price

But what is a good ROI for a marketing campaign? An ROI of 5 is considered a good return and an ROI of 10 is considered extremely good.

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How to Measure the ROI of a Product Sampling Campaign

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These rules apply to all beauty marketing but what if you’re specifically looking to measure the success of a product sampling campaign?

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Here’s how to work out the ROI of a sampling campaign.

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Investment

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First, you need to total up all the costs invested in the campaign.

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This includes media costs, which will vary depending on which platform you use. For instance, if you launched a campaign through Facebook, you will likely have put money behind your adverts to enable them to reach a wide audience. But if you’re sending emails to your customer database, you won’t have this cost (beside the cost of your email marketing tools, which could be ignored as they weren’t bought specifically for this campaign).

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You could also choose to calculate the value of the hours your team puts into creating, launching and monitoring a campaign.

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When it comes to sampling, specifically, there are further costs.

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There’s the cost of fulfilment: producing, packaging and shipping samples to the customers who claim them.

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Then there are the campaign fees for the sampling platform a brand chooses.

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Return

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As discussed, when calculating the return of a product sampling campaign, brands should add up their initial sales and combine it with the additional sales expected to come from their leads.

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But they should also keep an eye on other factors.

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For example, a brand may send a follow up email to encourage customers to leave a sample review, as well as encouraging them to buy a full-size product. Although posting a positive review doesn’t instantly put money in the bank, research from our partner Bazaarvoice has found there is a 140% conversion lift when shoppers read reviews and interact with other user generated content (UGC). A single customer review on a product relates to an average 10% conversion lift.

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And feedback holds value for product development. If customers feel a product’s fragrance is overpowering, for instance, a brand should consider toning it down in the future. Or if many customers are praising the texture of a product, a brand knows that its formula is successful and may consider prioritising texture in later collections.

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Therefore, brands should recognise that sample feedback represents an extra, valuable return on their sampling investment.

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