Calculating Your Return on Investment (ROI)

The Return On Investment (ROI) is a measure of your profit earned and should be the leading indicator of a successful marketing campaign.

What is Return on Investment (ROI)?

Your Return on Investment, often called ROI, is a calculation of profits earned from each investment. As it comes to marketing, the ROI is a measure of profits gained from any specific marketing campaign and will help you analyze whether or not such marketing campaigns should be repeated.

CityGro understands the value of calculating the return on investment as it comes to your marketing strategy. By calculating your marketing ROI, you can correctly assess the success of your marketing strategy, make sound decisions on future marketing investments, and alter ongoing marketing efforts in order to maximize revenue. While the CityGro platform provides a wide array of marketing capabilities, the ones that stick are the ones that produce a positive ROI.

How do I calculate my Return On Investment?

The ROI formula, in its simplest form, only requires two numbers; the cost of your marketing venture and the return made from that venture. Once you have these numbers you can put them in a formula that looks something like this:

The ROI Formula looks like this: ROI = (Return - Investment) / Investment

Example: You make $500 profit from a $125 marketing campaign.
ROI = ($500 - $125) / $125 ROI = 3X or 300%

With an understanding of how the ROI formula works, you can now analyze each marketing campaign and calculate your return on investment. Because your ROI can differ from one campaign to another, CityGro breaks down each campaign on an individual basis to give you the numbers you need to calculate the return.

CityGro provides the data you need to Calculate your ROI

Use this data to calculate your return on investment

When you calculate the ROI of each marketing campaign, you can make accurate assessments of which campaigns bring you revenue and which campaigns are not. We then can duplicate the campaigns that work, and shut down the campaigns that don’t. No matter your marketing strategy, CityGro can help you find success by providing you the data needed to calculate ROI.

Zak with Farr’s Fresh gets an 156% increase in business!

Calculate an ROI from the Size of your Network

The average CityGro client collects a database of 2,000 contacts in the first 6-12 months of use (per location). So what is that network worth? The answer depends on how often you can bring them back. If your average customer spends $10 per visit, then increasing each contacts frequency just 1 time a year adds $20,000 of revenue! What if you increased it one time per month? Or got every contact to introduce one friend?

Ask yourself?

If I could actively engage with every customer in my network,
how many times could I bring them back?

Multiply the answer to the above question by the average amount each customer spends and you can make a logical prediction of your ROI.

How can I improve my ROI?

The first step to improving your ROI is to calculate your ROI. Once you know that, you can now start making small changes to see if it makes an impact on the return. Try making small adjustments, such as changing the incentive, the timing of the message, or the verbiage of the messages and monitor the results. Then re-calculate the ROI and compare results. You might find that enhancing the incentive could increase redemptions, but due to the higher cost of the offer it might lower the ROI. Alternatively you could find that lowering the incentive might not change redemptions at all but increase your margins, thus increasing your ROI.

Don’t forget the old saying; “if you always do what you’ve always done, you’ll always get what you’ve always got.” Finding poor results provides an opportunity to change the input. Calculating a negative ROI is only bad if you continue to repeat the campaign.

Other Indicators of Marketing Success

While ROI is the main indicator of a successful campaign, there are several other indicators of a worthwhile campaign. Consider the following.

Opt-out rate: While some marketing campaigns have the goal of bringing people in immediately, others have the goal of creating top of mind awareness. When creating top-of-mind awareness is the primary goal of your marketing campaign, you may be less concerned with redemption rates and more concerned with the opt-out rate. A low opt-out rate means people are willing to accept your message even if they didn’t redeem the offer. It’s only a matter of time before they need your product and if your business is on top of their mind, they will be calling.

Click-through rate: Set up SmartLinks to gauge whether people are engaging with your message. A SmartLink can be added to any message and tracked in the CityGro Management Portal. By asking people to click on a link for more info, you can see if people have an interest in the offer regardless of whether or not they redeem the offer. A high click-through with a low redemption might suggest that you peaked your customer’s interest, but something may be deterring them from redeeming.

Open Rates and Read Rates: Your open rate or read rate tells you have many people are reading your content. While SMS Marketing read rates are nearly 100%, Email read rates may only be 20%. Compare read rates between emails to see which emails are performing the best. Try sending the same email to separate segments of your contact list using a different subject line in both and see what drives the best open rate.

For more indicators of marketing success, contact CityGro for a FREE, no-pressure demo.

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