Return on Marketing Investment (ROMI)

How You Know If Your Marketing Is Working

We have all heard, “you’ve got to spend money to make money” and for the most part that is true in today’s digital marketing world. Simply put, when you invest money into any marketing tactic, the amount of money that comes back to you (or not) is your return. This can ultimately end up in a gain or a loss and is usually expressed as a percentage when it comes to making financial decisions.

For example, you spent $2000 and get $6,000 in return, so you make $4000, a return of 200%. We all desire to launch marketing programs like this or even better, but of course, that’s not always the case. However, in the marketing ROI world we need to look beyond the basic to get the additional answers we need.

So how do you know if you are truly making money or not?

There are several things you need to consider when making this determination:

Conversion Tracking

How are you keeping track of whether a new customer comes to you through your tactic? In today’s digital world this should be a “given” that you are doing it and with all the analytics tools available should be relatively easy to do.

Even if you have a difficult time tracking phone calls to your sales people, make it a policy in your company that each time a sales person hears from someone new, they have to log in the source.

New Customer Value

What is the average value of a typical order amount from a new customer? Of course this will vary by product or service line, but just like “segmentation” in your overall marketing, it’s important to determine these numbers. You don’t have to be exact, but at least calculate an average as a starting point.

Customer Order Frequency

How often does the typical customer order from you? Once a month, quarter or even year?

Customer Retention Rate

Do customers stay with you over the long haul or just bounce around? How long? 1 year? 5 years? More?

Lifetime Value of a Customer

What is the lifetime value of those customers?

Here is an example:

Ultimately, knowing your numbers is the key to determining your Return on Marketing Investment.

At Ad Ej Solutions, we are committed to helping small and medium-sized B2B businesses understand marketing, from Strategy to Tactics. Our commitment is NEVER to pressure you into doing anything that isn’t right for you and giving you the right information to make the right decisions. Call us today!

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