How to Measure the ROI of Your Explainer Video (Step-by-Step Guide for Measurable Success)

In today’s competitive digital landscape, creating a fantastic explainer video is only half the battle. The real question that keeps marketing managers and CEOs up at night is: “Is it actually working?” At Yum Yum Videos, we believe that every creative investment should translate into tangible business results. That’s why understanding how to measure the Return on Investment (ROI) of your explainer video isn’t just good practice—it’s essential for proving its value and optimizing your future video marketing efforts.

This comprehensive guide will walk you through the precise steps to calculate and significantly improve your explainer video’s ROI, ensuring your visual storytelling translates directly into business growth.

Why Measuring Explainer Video ROI Matters More Than You Think

Many businesses launch explainer videos and simply track views. But views alone don’t pay the bills. Measuring video ROI helps you:

• Justify Investment: Prove to stakeholders that your explainer video company budget is money well spent.
• Optimize Future Efforts: Learn what’s working (and what’s not) to refine your video content strategy.
• Drive Business Growth: Directly link your creative assets to leads, sales, cost savings, and improved customer experience.
• Gain a Competitive Edge: Understand your video’s true impact, allowing for data-driven decisions that outperform competitors.

The Potential for Exponential Returns: Why Explainer Video ROI Can Be So High

The perception of high ROI from explainer videos isn’t just anecdotal; it’s backed by industry data and compelling success stories. When executed effectively, explainer videos have the potential to deliver truly exceptional returns for several compelling reasons:

• Dramatic Increase in Conversion Rates: Studies consistently show that including an explainer video on a landing page can significantly boost conversions. Reports indicate conversion rate increases ranging from 20% to over 80%, with some cases seeing even higher jumps (Unbounce). This direct impact on lead generation and sales is a primary driver of high ROI.
• Enhanced Product Understanding & Reduced Friction: Videos simplify complex products or services, leading to better customer comprehension. When potential customers truly understand what you offer, their hesitation decreases, and their likelihood to convert increases. This also applies to existing customers, who are less likely to churn when they feel confident using your product (HubSpot).
• Significant Reduction in Support and Sales Costs: A well-made explainer video can proactively answer common questions about your product or service. This leads to a reduction in customer support inquiries, freeing up valuable resources and directly saving operational costs. Sales teams can also use videos to qualify leads and address common objections upfront, shortening sales cycles and increasing efficiency.
• Boosted SEO and Organic Traffic: Google favors video content. Pages with videos tend to have lower bounce rates and higher dwell times (time spent on page), signaling quality to search engines. Videos can also appear directly in Google’s search results (video snippets), attracting more qualified organic traffic to your site (Semrush). A strong video marketing strategy complements your overall SEO efforts.
• Increased Customer Lifetime Value (CLTV): Beyond initial sales, explainer videos used in onboarding or ongoing education can lead to greater customer satisfaction and product adoption. This improved experience translates into higher customer retention and, consequently, a higher Customer Lifetime Value for your business.

Real-World Impact: The Medvector Success Story

Consider the case of Medvector. This innovative company leveraged the power of explainer videos to articulate their complex value proposition to potential investors. With an investment of just $10,000 for each of their two high-quality explainer videos, and backed by an excellent product, Medvector successfully managed to secure an astounding $3.5 million in investments. This powerful example underscores how a relatively modest investment in compelling video content can lead to truly massive financial returns, proving the immense ROI potential of a well-executed explainer video.

Key Metrics: What to Track for a Holistic View of Your Explainer Video ROI

To accurately calculate your explainer video’s ROI, you need to look beyond vanity metrics. Here are the core categories of data points to monitor:

1. Engagement Metrics (How well is your video captivating?):

• Views/Plays: Basic measure of reach.
• Watch Time/Average View Duration: Crucial. How much of your video are people actually watching? (High watch time indicates strong engagement).
• Completion Rate: What percentage of viewers watch the explainer video all the way through?
• Audience Retention: Where do viewers drop off? (Tools like Wistia or YouTube Analytics offer detailed graphs).
• Shares, Likes, Comments: Indicate audience interaction and potential organic reach.

2. Conversion Metrics (Is your video driving desired actions?):

• Click-Through Rate (CTR): For clickable CTAs within the video or accompanying text (e.g., “Learn More,” “Sign Up,” “Buy Now”).
• Lead Generation: Number of new leads (e.g., form submissions, email sign-ups) directly attributed to the explainer video.
• Sales/Revenue: Number of purchases or revenue generated directly from viewers who watched the video.
• Conversion Rate: The percentage of viewers who complete a desired action after watching the video.
• Trial Sign-ups/Demo Requests: For SaaS or B2B products.

3. Support & Efficiency Metrics (Is your video saving you time and money?):

• Reduced Support Tickets/Calls: For explainer videos designed to clarify complex processes, product features, or FAQs.
• Faster Onboarding Time: If the video is used for customer onboarding or employee training.
• Increased Sales Team Efficiency: Sales reps can use videos to pre-qualify leads or answer common questions, shortening sales cycles.

4. Brand Metrics (How is your video impacting perception?):

• Brand Mentions: Increased discussion about your brand online.
• Website Traffic: Spikes in traffic to relevant pages where the video is embedded.
• Search Volume for Brand Terms: An increase might indicate greater brand awareness.
• Social Sentiment: Positive mentions and feelings associated with your brand (requiring social listening tools).

Step-by-Step: How to Calculate the ROI of Your Explainer Video

The basic ROI formula is straightforward:

ROI=Cost of Investment(Gain from Investment−Cost of Investment)​×100%

Let’s break down how to apply this to your explainer video:

Step 1: Determine Your Total Investment (Cost of Your Explainer Video)

When working with professional explainer video companies like Yum Yum Videos, your main investment will be the all-inclusive production fee. This typically covers everything needed to deliver a ready-to-use video.

Costs to consider in your total investment:

• Production Fee (Yum Yum Videos): The transparent, upfront price for your high-quality explainer video, which includes voiceover, licensed music, and all necessary assets, so you have clarity on your core investment.
• Distribution & Promotion Costs: Any advertising spend (Google Ads, social media ads) to promote the video.
• Internal Team Time: Hours spent by your internal team on reviews, approvals, strategy, and promotion (even if not an external cost, it’s an internal investment).
• Software/Tools: Any specific subscriptions used for video hosting, analytics, or promotion.

Example:

• Video Production (Yum Yum Videos’ All-Inclusive Fee): $15,000
• Ad Spend: $2,000
• Internal Team Time (estimated): $2,000
• Total Investment = $19,000

Step 2: Assign a Monetary Value to Your “Gain” (Return on Investment)

This is where you quantify the impact of your video. You’ll need to work with different metrics and assign a monetary value to them:

• Value of a Lead: If your explainer video generates leads, what is the average monetary value of a lead for your business? (e.g., if 10% of leads convert to a sale worth $1,000, and your lead-to-customer conversion rate is 10%, then each lead is worth $100).
  • Example: 200 new leads came directly from the video. Valued at $100 each, this totals $20,000.
• Value of a Sale/Conversion: Track direct sales generated from explainer video viewers.
  • Example: 30 direct sales came from video viewers, each worth $1,000, totaling $30,000.
• Cost Savings from Reduced Support: Calculate the average cost of a support ticket/call and multiply by the reduction attributed to the explainer video.
  • Example: The video reduced 180 support calls, each costing $30, totaling $5,400 in savings.
• Attribution Model: Decide how you’re attributing conversions to the video (e.g., “first touch,” “last touch,” “linear,” or multi-touch models in your analytics platform).

Step 3: Apply the ROI Formula

Let’s use a compelling hypothetical example that reflects the high potential ROI:

• Total Investment: $19,000
• Gain from Video (Leads + Sales + Support Savings): $20,000 (leads) + $30,000 (sales) + $5,400 (savings) = $55,400

$$ROI = \frac{(\$55,400 – \$19,000)}{\$19,000} \times 100\%$$$$ROI = \frac{\$36,400}{\$19,000} \times 100\%$$$$ROI \approx 191.58\%$$

A 191.58% ROI means that for every dollar you invested, you got back an additional $1.92 in profit. This demonstrates a significantly positive explainer video ROI and showcases the potential for powerful returns.

Essential Tools for Measuring Explainer Video ROI

You can’t manage what you don’t measure. Here are the tools you’ll need:

1. Video Hosting Analytics:
   • Wistia, Vimeo, YouTube Analytics: Provide crucial data on views, watch time, completion rates, audience retention graphs, and geographic distribution. Wistia, in particular, offers robust engagement heatmaps and turnstile (email capture) features.
2. Google Analytics (GA4):
   • Set up Goals and Events to track specific actions users take after watching your explainer video (e.g., form submissions on a landing page where the video is embedded, clicks on a CTA button beneath the video).
   • Use UTM parameters in your video’s promotional links to track traffic specifically from your video marketing campaigns.
3. CRM (Customer Relationship Management) Systems:
   • HubSpot, Salesforce, Zoho CRM: Track leads generated, their source (attributing to video where possible), and conversion through the sales funnel.
4. Marketing Automation Platforms:
   • Pardot, Marketo, ActiveCampaign: Integrate video viewing data with lead scoring and nurturing campaigns.
5. A/B Testing Tools:
   • Google Optimize (now mostly via GA4), VWO, Optimizely: Test different explainer video versions, landing page placements, or CTAs to see what drives better results.

Strategies to Improve Your Explainer Video ROI

Calculating ROI is retrospective. To ensure future explainer videos deliver even better returns, consider these optimization strategies:

• Before Production: Clear Goals & Audience Research:

• • Define your “Why”: What specific, measurable objective should this explainer video achieve (e.g., increase sign-ups by X%, reduce support calls by Y%)?
  • Know Your Audience: What are their pain points, what information do they need, and what motivates them to act? This directly impacts script and visuals

• During Production: Quality & Strategic Storytelling:
  • Compelling Script: Focus on a clear problem-solution narrative with a strong emotional hook and a single, clear call to action.
  • Right Animation Style: Choose a style that best resonates with your brand, message, and target audience (e.g., 2D for simplicity, 3D for depth, motion graphics for data visualization).
  • Professional Voiceover & Sound Design: High-quality audio is paramount.
  • Clear Call to Action (CTA): Make it impossible to miss what you want viewers to do next.

• After Production: Smart Distribution & Optimization:
  • Strategic Placement: Embed your explainer video on high-traffic landing pages, product pages, and your homepage.
  • Promote It Widely: Share across social media, email campaigns, and consider paid advertising targeting relevant audiences.
  • A/B Test: Experiment with different video thumbnails, CTAs, explainer video lengths, or even slight script variations to see what performs best.
  • Monitor & Iterate: Regularly review your explainer video analytics. If completion rates drop at a certain point, consider editing or creating follow-up content

Common Pitfalls to Avoid in Explainer Video ROI Measurement

• Ignoring the “Full Cost”: Only counting external production fees and forgetting internal team time or promotion spend.
• Focusing Only on Views: Views are great, but conversions and business impact are better.
• Lack of Clear Goals: If you don’t define what success looks like beforehand, you can’t measure it.
• Poor Attribution: Not knowing how conversions are linked back to the explainer video source.
• One-and-Done Thinking: Uploading the video and forgetting about it. Ongoing promotion and optimization are key.

Your Explainer Video: An Investment, Not Just an Expense

A high-quality explainer video, when strategically planned, produced, and promoted, is far more than just a marketing asset; it’s a powerful tool that delivers measurable returns. By diligently tracking the right metrics and applying our step-by-step ROI calculation, you can clearly demonstrate its value and continue to optimize your video marketing for sustained business growth.

Ready to create an explainer video that delivers undeniable ROI? As a leading explainer video company, Yum Yum Videos offers all-inclusive pricing so you know your full investment upfront, allowing you to focus purely on the remarkable returns. Contact Yum Yum Videos today to discuss your project! Or explore our portfolio of successful explainer videos that drive results.

Sources:

• https://unbounce.com/landing-page-articles/the-benefits-of-using-video-on-landing-pages/
• https://blog.hubspot.com/marketing/video-marketing
• https://www.semrush.com/blog/video-seo/