Return On Investment

Return On Investment (ROI)

Return On Investment is one of the most important things a business needs to think about before every decision is made. At AB Small Business Marketing we use it everyday to decide what marketing approach is best for our clients’ needs. We build programs that are affordable and commission based with a high emphasis on ROI. Two key items to think about when trying to figure your marketing out are first remember that marketing is the only expense every business has that actually brings money into the business, and secondly but most importantly, for every dollar you spend, you should make ten dollars in return.

How to Calculate ROI and Response
The simplest way to calculate ROI is to find the total amount of money made off a marketing campaign or single promotion, then divide that money by the total cost of a campaign. A marketing campaign that costs $250 but makes $2500 has a ROI of 10%. How is ROI different from Response Rates? Response Rates are the percentage of people who called after seeing your ad. If you did a direct mailer that sent out 1,000 pieces and costs $600 with a response rate of 1% you would have earned 100 new customers. If your product costs $60 you would have made $6,000 and your ROI would be 10%. AB uses such methods to find the best marketing campaigns that will generate the most revenue for you.
Then What Type of Marketing Has The Highest ROI?
Traditionally, radio, television, and newspapers have low ROI, however, this is dependent upon which industry your business serves, as different industries perform better using different mediums.

Direct mail, coupons, flyers, canvassing, and other forms of direct marketing usually offer much higher ROI. With canvassing having the highest ROI and the most controlled costs, making it one of AB’s most popular services.

Why do people continue to do things with low ROI?

The mediums that offer higher ROI usually require a marketing specialist in order to maximize the effectiveness of that type of marketing campaign. Some common mistakes are not putting “call” in front of a phone number, this simple tip will help you increase an ad’s effectiveness. Another common mistake is making an ad too busy, hard to read, or sending the wrong message with the wrong imagery. However, the most common reason people continue to use mediums with low ROI is because they saw someone else do it and reason its probably the best thing to do. This is called “Copy Cat Marketing” and it usually proves very costly as well ineffective.

When To Use Radio,TV, or Newspaper

It takes on average 3 to 5 times of a prospect seeing the same or similar message in a different form before they decide to respond to that advertisement. Radio, TV, and Newspapers can be a very useful branding tool that will increase your ROI on other campaigns. With an effective radio ad, people will remember your name. With an effective direct marketing medium you can give them the incentive to buy or “Call to Action”. This can raise the response on a direct mailer from 1% up to 5%, or even 10%.

What Should I Do then?

Every business is unique; it’s due to that uniqueness that there is no single answer that fits for everyone. However, AB Small Business Marketing can design and execute a marketing campaign that is the answer to your business’s unique marketing challenges. Contact us today to find out more and start growing your business!

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