How to calculate a return on investment for your marketing campaign
Here at Data Bubble, we will ask you the difficult questions. And yes, we will even sometimes turn away business!!!
Why, you ask?
Because if you aren’t going to get a good return on investment, then we will tell you so.
This is what happened earlier on this month. A client wanted to do a mailing campaign to a list of new prospects. He was selling an item at £20, so his return on investment would need to be very high to make the campaign a success.
He then asked me why he hadn’t been told this by other list brokers? I said I couldn’t comment on other companies, though assured him that we are different from other companies.
I was please to let the prospect go, safe in the knowledge that he knew we are honest & trustworthy, and want what is best for his business.
So what is Return On Investment and how do you calculate it?
A common definition of Return on Investment (ROI) involves looking at the cost of a marketing campaign, relative to the profit generated.
You put £2,000 into a marketing campaign.
You sell 50 items at a profit of £100 each, making a total profit of £5,000. This profit is before the cost of the campaign, so we must deduct the campaign costs – i.e. £5,000 profit, less cost £2,000 = £3,000 Net profit
Your Return on this Investment is £3,000 divided by £2,000 x 100 = 150% ROI.
Working out your return on investment ensures that you are spending your money on the best form of marketing.
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