We get this question a lot.
And, yes, measuring the ROI on promotional products is not as simple as:
A (net profit) – B (cost of investment) x100 = %
That said, if you are looking to include branded merchandise or promotional products as part of your marketing spend, there are ways you can get some fairly decent metrics.
What is Your Goal?
Understanding what your goal is, for this particular marketing spend, is key. Are you looking to increase brand identity? Build awareness around a new product launch? Gain a larger social media following? Generate leads? Increase revenue? Being clear on your marketing objective helps inform what metric you are going to use to measure your return on investment.
Choose Your Metric
Once you understand your objective, then you need to choose the metric you will use to measure it. If you are looking to grow your social following, then likes, follows, shares and retweets would be your metric. If you are hoping to generate leads, then the number of new email sign ups might be your metric of choice. If it is straight up revenue increase you are after, then it comes down to the profit bottom line/actual sales.
Tailor a ‘Call to Action’
The metric you are using to measure ROI can help inform your ‘Call to Action’ – the feature unique to this promotional product campaign that will help your calculations. This might be a particular hashtag, a QR code, a unique URL or a google phone number that allows you to track and measure calls. By tailoring a specific ‘call to action’ you are able to better track conversions, and then work out the ‘cost per acquisition’.
The Conversion Math
The ‘cost per acquisition’ will be different for every business and also depend on your chosen metric. If your campaign ends up delivering you 400 leads and your average lead conversion is 1 in 10, that is 40 new clients/customers. If the average spend of your customer is $100, then that equates to $4000 in potential revenue. Subtract the amount spent on the promotional products and you have a fairly solid idea of return on investment. If your goal is increased social reach, then based on experience, you might know that 1000 new followers is worth $X to your business. Deducting your costs from the amount of potential revenue will give you a monetary metric to work with.
Whilst the system above is based on trying to establish a quantitative (number/revenue based) understanding of a promotion’s success, we must not ignore the qualitative benefits. These are the promotional advantages that stretch far beyond the simple math.
Beyond the Numbers (because it’s not as simple as that).
The great thing about promotional merchandise is that it has far greater reach than your initial calculations might assume. Which is why the ROI metric that really matters is the one that focuses on brand image in the long term. This is the metric that Forbes calls the new ROI of marketing – Return on Impressions. Essentially, this refers to the amount of times your brand is front and centre and makes an impression. If you giveaway a branded drink bottle, then this might be seen every time the recipient goes to the gym. If it’s a promotional backpack (think ‘Fitness First’) this might be seen by a further 100 people, every single day. The average length of time people hold on to promotional items is eight months which means, long after your campaign is over, your brand is still making an impression. In addition to the amount of people who are seeing your product, there is also the softer ‘consumer perception’ metric to also be considered. The stats show that, after receiving a promotional product, 82% of people had a more favorable impression of that brand.
When it comes to ROI, engagement may be harder to calculate, but it is probably the return that matters the most.
As Forbes explains, ‘Yes, you can use tools to track website traffic, content sharing, comments and so on, but you need to analyse how people are engaging with you, your content, and your brand. Remember, relationship brands are the most powerful brands in the world.’
If you are looking to create a real and lasting relationship with your customer, offering promotional products with proven ROI, then get in CONTACT with us today!