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Marketing Return on Investment

Content provided by Sanlam. See Financial Solutions for Business Owners, for tailormade financial advice.


John Wanamaker (American merchant, religious leader, civic and political figure) on occasion had the following to say on marketing and the placement of advertisement: “Half the money I spend on advertising is wasted, the trouble is I don`t know which half”.

It is against the background of just this statement that it is of vital importance for business owners to make well-considered decisions when having to decide on marketing.

 There are essentially two ways to calculate a RoI on marketing expenses.

  1. Testing – apply a marketing element, evaluate the outcome and decide if and how you wish to continue with the application of the specific element, given the results. The aim is to improve the RoI with every test, measured against a benchmark for that specific element.
  2. Measurement – it sounds obvious, but most business owners fall into the trap by not making sure that some sort of measurement is indeed possible, before deciding to apply a specific marketing element.

The following marketing elements may be applied as direct response opportunities; that is, the roll-out could be structured in such a way that client response is monitored continuously and on-going adjustments may be implemented to improve the impact and outcomes.

  • Advertisement (place more than one and see which provides the best results)
  • Direct mail (“snail mail”) and e-mail campaigns (first do a random test on a small scale and make adjustments depending on the outcome)
  • On-line marketing (banner advertisements for example). The cost per click and click through ratios provide useful feedback statistics.

The crux of the matter is to decide in advance on the measurement method for a marketing element and to put in place a record-keeping system in conjunction thereto.

Your ‘point-of-sales’ staff members may make a valuable contribution in obtaining insight from clients. Make a point of asking the client where he or she found out about the business every time you service a client. In this way you will be able to translate the feedback to specific marketing elements.

Use the feedback obtained from the measurement activities to decide whether you should use more or less of something, try something completely different, or make adjustments to obtain better results from your marketing activities. It is possible to improve the returns on you marketing investment. This will require you to be involved in the roll-out and monitoring processes. The old adage does say: “The eye of the master fattens the horse”.

Article written by Jannie Rossouw, Head: Sanlam Business Market

Copyright © Sanlam, 2016

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