Do You Know Where Your ROI Is?

As a serial entrepreneur, I’m sometimes surprised at the number of business owners who don’t bother to understand their ROI or their target audience. Knowledge is the key to understanding your marketing. And without this knowledge, you’re marketing in the dark.

Return On Investment (ROI)

I’m sure most of you are already familiar with this term, but in case you’re not, ROI is the cost of a marketing campaign relative to the profit generated during a certain period of time.

Now ROI doesn’t have to be rocket science, though it’s sometimes a challenge to develop a trackable plan. I’ll try to break down the ROI of every marketing opportunity we consider. For our business we start by asking ourselves a few simple questions:

  • How much revenue must we generate to break even on this opportunity? (Though your goal shouldn’t be to break even, it’s important to know where this tipping point is located.)
  • And what is our projected revenue from the marketing investment? If we can’t answer these questions, then it’s probably not the right opportunity for us. Or if we don’t expect revenues to reach certain levels, we look for other opportunities.

If you’re unable to measure the results of your company’s marketing plan, you need to reconsider your plan. You need to develop a plan that is measurable, don’t go from one business to another. You must also track the results. Can you be successful shooting from the hip? Sure. We all know business owners without a plan who have enjoyed spurts of success. But that’s a tough way to achieve success, and it’s particularly tough to thrive over the long haul without a good, measurable plan.

Target Audience

Too often have I seen business owners give little thought to their target audience. If you’re a plumber, your target audience for a marketing campaign should not be “anybody with water pipes in their house”. The broader the audience, the more difficult it is to develop an effective marketing campaign. The more you refine your target audience, the more likely you are to succeed with your next promotion.

Your targeted audience should coincide with how you position your company, and the image you want to portray. A plumbing company can do many things. Ask yourself these questions:

  • Is your strategy to be the cheapest plumber in town?
  • Is your strategy to be the company that specializes in installing high-end bathrooms?

These would be two very different lists of prospective customers, and in turn, would require significantly different marketing campaigns to be successful.


This is where we start to combine our trackable plan with our target audience. How many sales must you generate for your plan to be successful? What percentage of your audience can you convert into a sale? The more refined your target audience, the higher the return you should expect from an effective campaign.

Having trouble making these predictions? That’s OK. Once again, that’s why it’s so important to track the results. Not every plan will generate the results you expect. And when presented with the same opportunity again, you can make even wiser decisions because you tracked the results the last time around.

Promotional Marketing

One of the reasons promotional marketing items are effective is because these personalized items are typically used to promote to a more refined target audience. Remember, the more refined your audience, the higher your expectations should be to convert prospects into customers. Where a radio spot or TV ad is broadcast (transmitted to a large undefined group), think of promotional marketing as narrowcast.

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