ROI. It’s a buzzword,
I know; it’s an acronym we’ve heard a lot lately. “Before you spend money here, have you determined the return you will get?” Buzzwords and trendy management techniques come and go, but measuring your return on your investment will never become old, unless of course you don’t care if you have a good return on your spending.
Interestingly, promotional products and their use rarely get measured.
Big companies measure return from almost all other forms of advertising and marketing: analysis of web traffic, click-throughs, coupon redemption, viewership, and more. But, for some reason the effectiveness and ROI of promotional products isn’t a priority.
This measurement includes selling of promotional products or using promotional merchandise as part of your marketing efforts to demonstrate to your boss, or your
customer, that the expense is actually an investment.
It’s true that not all promotional materials’ use can be measured, nor would you want to do so; however, important marketing initiatives, short- and long-term ones, supported with promo products, should be measured for effectiveness.
Just about every company is trying to increase sales — overall sales such as dollars, units, or per cent gain, or of specific products — increase new accounts, or simply
increase market share.
If you sell widgets (who doesn’t love widgets?) and you want to increase your sales from 80 per week to 100 per week, you would set up a marketing and sales plan to achieve your goal. The first question: What is the net profit required to increase sales from 80 to 100 per week?
The second question: What would you be willing to spend in order to increase sales by 25 per cent? After making these calculations, you can determine how to spend the investment and set up an ROI model.
This is rudimentary, but simplicity is important as you begin to look at how you spend your budget in a way that you can measure it.
Employee engagement and retention is an important subject for all companies.
The cost to train and get a new employee up to speed is expensive, but many have not dollarized it so that is the first step.
A premier brokerage firm’s goal was to maintain 5,000 brokers across the country. Over the past five years, the firm saw 800 brokers per year leave. In order to keep the total number of brokers at 5,000, they were spending $16MM per year ($20,000 per broker) training new brokers to replace those who had left.
The firm implemented a travel incentive program in an effort to increase broker retention. If brokers reached certain sales targets, they received a trip. The firm’s tracking showed that brokers qualifying for trips were 84 per cent more likely to remain with the firm than those who did not.
The return on investment in this case was driven from the cost to train new brokers. The issue is really that the brokers did not understand previous incentive programs and therefore did not participate.
Brokers spend much of their day at a desk. The focus was to build awareness at this touch point. A coffee tumbler was sent to every broker to kick off the annual
incentive program. Information on the tumbler included thresholds for various trips — the tumbler even had a tip card inserted which covered all other FAQs. Also, they sent out a pen quarterly with the various names of the potential destinations.
Companies continue to scrutinize every dollar that is spent, even as we see the economy recovering. Many decision-makers realize they survived 2009 and 2010 without as many pens, bags and mugs as they had previously. This means that helping buyers and decisionmakers understand that investing in promotional materials is not an added expense, and measuring its effectiveness, is more important than ever to help them
see the connection between increased sales and promotional materials. mem
- as featured in marketingedge magazine, Winter 2010