Three indicators will tell you more about the effectiveness of marketing in a company than words: ROI, ROMI and ROAS. In the article, experts from “Tochno.” explained how to calculate them and how to use the information obtaine to grow your business.
ROI is the return on investment in a business.
Every day, a business how to build phone number list spends money: on rent, advertising, salaries, purchasing new equipment, etc. There is no escape from expenses, but the level of profit can fluctuate.
To understand whether expenses are paying off, a business uses ROI. The ratio shows the ratio of income to funds spent and the profitability of the business: how much revenue exceeds expenses and whether it exceeds them at all.
It is use to calculate the profitability of any investment in business, including the profitability of marketing or its individual areas. To do this, the formula does not take into account the total income and expenses, but only the profit from marketing or the marketing area and the expenses for it.
The indicator is calculated as a percentage using the following formula:
Income — the company’s revenue from all sales channels, online and offline.
Expenses — expenses on production, marketing, logistics, employee salaries, commissions and taxes.
Let’s interpret the results:
ROI > 0%: the investment paid for itself.
ROI = 0%: the company has neither lost nor earne anything.
ROI < 0%: the company lost money, the funds spent did not pay for themselves.
The higher the ROI, the higher the profitability.
By comparing this indicator in different periods (for example, every quarter or year), you will assess whether the profitability of your business is growing or whether it is worth revising your business strategy. The indicator is also calculate for individual areas, projects, and products.
What is ROMI in Marketing
ROMI is a measure of profitability of marketing. ROMI shows how effectively you are promoting your business. In other words, ROMI is the ROI in marketing .
The coefficient shows the ratio of income from marketing channels to the funds spent on it. Not only advertising costs are taken into account, but also expenses on salaries of specialists, payment for services, organization of image events, etc.
When and why you need to calculate ROMI
ROMI helps you understand whether you are effectively promoting your company and whether you need to change your system.
CTR, the number of applications and leads can grow from month to month, but not affect the profitability of marketing: for example, people how to find fresh content ideas your audiences will love who clicked on the banner did not perform the target action, applications were driven by bots, and leads were not targete.
ROMI reflects the profitability of marketing due to the fact that the formula takes into account only marketing revenues and only marketing expenses. Advertising expenses on social networks, expenses on distributing flyers at the metro, and the salaries of a marketer and designer are also taken into account.
The ROMI formula looks like this:
Let’s interpret the results:
ROMI > 0%: marketing expenses paid off.
ROMI = 0%: the company has neither lost nor earned anything.
ROMI < 0%: Marketing expenses excee revenue from it, change strategy.
For example, you have been selling souvenirs and holiday products in a shopping center for many years and realize that you want to earn more. You start managing social networks, order advertising on a banner in the shopping center, hire an animator to distribute flyers. How can you evaluate the profitability of marketing and understand au emai list whether it is worth investing in it further? You can calculate ROMI for a month and draw conclusions.
What should be taken into account when calculating
The ROMI formula is simple and straightforward. But if you don’t take into account something in your income or expenses, the formula will break and the results will not be accurate.
What income is include in the ROMI calculation:
sales from YAN advertising campaigns;
sales from targeting VKontakte and other social networks
sales via e-mail letters;
sales with seo;
sales from publications in magazines and online publications;
sales from advertising on bloggers, etc.
