Do you know what you are really measuring?

19-09-2021

At first glance, measuring the success of your business is easy. Either you are in red or black at the end of the year. Measuring the success of each marketing program is ultimately related to the overall success of your business. If your marketing plan is not working, you will see a lot of red ink. More and more VARs are finally realizing that they must have a way to measure the return on investment of every marketing program. It is no different than having a “checks and balances” system. If it works fine, why? If not, why not?

Do you really understand the meaning and value of ROI? Sure, you measure the success of your Cooperative Programs / Marketing Development Funds (MDF) and base your ROI on activity. You communicate your ROI through your channel partners. You realize that you need better tracking of ROI, and you want to measure your business success based on ROI, based on income. You even recognize that you must have a way to track ROI for each program and promotion. However, at the end of the day, you may actually be missing a clear ROI.

Why is this? Based on the constant buzz about it, we know ROI is important, but simply attaching a way to measure effectiveness to each program does not guarantee that it will produce clear results. Do you understand what you are really (or should be) measuring? Have you planned and executed programs so that you can really measure them? If you are asked to justify your programs and promotions, do you have the tools and resources to display your program’s goals, activities, and results in a positive light? If not, you need to create something pretty fast to keep those programs out of the block.

Your survival may depend only on how well you can measure your success.

Here are some steps to set up a simple ROI scenario for your marketing pieces:

– Determine the cost of the individual program, promotion, brochure or marketing item, and do this for each marketing item and program. Include all expenses involved in running this program, such as labor costs and brand costs (public relations, advertising, website initiatives); and printing, web / email, and direct mail costs.

– Determine the potential number of impressions of each piece of the plan. How many brochures will you mail? How many people will receive your email? What is the circulation of the newspaper or magazine in which you advertise or send your press release? If you can’t quantify something, use “0” impressions, but include the cost of this in your equation.

– Calculate the response rate you could receive for each part of the program. Based on past history, you may have this information. Otherwise, make an educated guess (i.e. an average of 15 percent of recipients open your bulk emails). See the Direct Marketing Association Response Rate Trends Report for more detailed information.

– What are the annual sales of each client with you? Know the dollar value that your customer has within your company based on annual sales.

Using this information, you can now create a formula, based on how your program expenses compare to the number of impressions and the perceived response rate. Create estimated total income, subtract your expenses, and voila! It has its ROI.

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