Measuring Return on Investment
The good folks at Direct Magazine shared this article about e-mail return on investment. The comments in the article appear to be accurate, if ROI is measured as net sales divided by marketing cost:
- Catalog drives $7.09 net sales for every marketing dollar spent.
- E-Mail drives $57.25 net sales for every marketing dollar spent.
- Online Marketing drives $22.52 net sales for every marketing dollar spent.
ROI Comparison, Catalog, E-Mail and Online Marketing | ||||
Catalog | Online Mktg. | |||
Circulation / Searches | 100,000 | 100,000 | 225,200 | |
Response / Conversion | 5.32% | 0.17% | 7.50% | |
Responses | 5,318 | 172 | 16,890 | |
Average Order Size | $100.00 | $100.00 | $100.00 | |
Net Sales | $531,750 | $17,175 | $1,689,000 | |
Gross Margin | 50.0% | $265,875 | $8,588 | $844,500 |
Less Cost | $75,000 | $300 | $75,000 | |
Less Variable Expense | 13.0% | $69,128 | $2,233 | $219,570 |
Net Profit | $121,748 | $6,055 | $549,930 | |
ROI per Direct Magazine | $7.09 | $57.25 | $22.52 |
Given the return on investment stats in the article, and an assumed cost of $0.003 per delivered e-mail, the same circulation of 100,000 customers results in catalog driving thirty times as much sales volume as e-mail. The same assumptions results in online marketing driving ninety times as much sales volume as e-mail. You can use this template to plug in your data, your assumptions, and see how your story turns out.
I think it is important to see a variety of ways of analyzing data. It is important that you develop a balaned approach to understanding ROI. The Direct Magazine example, and this example, provide two opposite, but appropriate, ways of measuring ROI.
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home