Return on Investment has a very important place in business, finance, and marketing. One of the most overlooked aspects of most small businesses is tracking the Return on Investment (ROI) that marketing efforts yield. Sure, most business managers or owners track profit margins and at the end of a pay cycle, evaluate relative success or failure on their ability to make a profit for the business. What most cannot state with certainty is how much money is being made on their marketing investment or what can be expected in terms of return on investments over the lifecycle of advertising expenditures.

For example, a day spa will purchase equipment to make money from its use beyond its initial costs. When those costs are spread out over the life cycle of the equipment or project, it provides an insight into how much that investment costs per year and how much will be recouped with each use over the term of its service to the aesthetician and the spa business. The difference between expenditures for the equipment to break even and the amount of money made from the use of the equipment during the equipment’s term of service is the Return on Investment (ROI). The simple formula is (Net Benefits / Costs) x 100%.

Just as a business owner would with the spa equipment, a marketing manager or small business entrepreneur always use ROI to track the success of a marketing plan or campaign. Whether the marketing strategy includes brochures, flyers, online marketing, yellow pages advertising, or newspaper promotions, it is essential to be able to track these expenditures and what the success rate is for each. With a website, it is fairly easy to track ROI based on website traffic, direct new client communication via the website, or the number of appointments being booked via the business website. For other types of more traditional advertising, it can be a little more challenging.


A Few Insider Tricks for Tracking ROI

For yellow pages advertising, consider using a separate phone number so that the business can track the number of incoming calls from a phone book ad. The same tactic is also helpful for a regular brochure – obviously, this will not work for a short-term flier because of the cost to install an auxiliary phone number.

However, with fliers, radio, and newspaper advertising, you need to have a measuring tool. Offer a special, include a coupon, or advertise a service at a unique price point. When new clients come to the business through these special offers, this provides a tangible way to track where they are coming from. Lastly, ask new clients how they heard about the business. It is a simple question that carries a huge impact on any business.

Tracking Return on Investment Can Be Easy

There are many ways to track ROI. One of the easiest is to use the simple formula for ROI in an Excel spreadsheet. There is also other software out there that tracks more sophisticated ROI formulas and will allow a small business owner to combine all of the individual investments into one source to track overall investment versus net benefits over time. Deciding on a method should be decided by the amount invested in the marketing of a company and how many separate projects or investments must be tracked.

Be Realistic About True Benefits

The key thing about ROI is to figure out the costs ‘true net’ benefits. Break down both in detail to ascertain a true ROI and that includes any costs associated with the action, including both expenses and costs of service. By tracking the ROI of a marketing plan or advertising campaign, any business owner or marketing manager can quickly see a very accurate measure of the worth of the investment and the amount of money made over the lifetime of that investment.

The importance of ROI to marketing is to gain a complete understanding of what marketing practices are furthering the success of a business, and which are draining the company finances. This allows the small business owner to plan and implement a newspaper that is good for the overall health of the business, and phase out those that are not working.

About the author: Timothy M. Wilson works as a content provider for essaywritingservice.nyc. He is interested in self-development and spiritual awakening. So he likes keeping up with modern tendencies of personal development. It helps him plan ahead and have time to do everything.