Return on Investment Analysis

At Objective Marketing, we make sure you are aware of the potential return on your investment in us and the elements we recommend you adopt in your overall strategy. That said there are no guarantees, if there were we’d already be millionaires! However, a well thought out campaign constructed by us could very well make a big difference. As always, we begin with looking at the Life Value Cycle of your clients. This gives you a complete picture of what the cost of acquisition of a client costs and what that is worth to you over time. This may qualify an advertising spend, either on or off line, a direct mail, or a pay per click campaign. For each marketing activity we recommend, we will ascertain what the potential return on investment is. We have detailed below an example that deals with direct mail.

Example: Second Hand Car Sales in North East London
Our client was a second hand car company in North East London. After we had done some research we concluded that cars 6 years and over are more than likely to be exchanged or upgraded in the next year. Therefore, the target audience would be car owners with cars greater than 6 years in age. There were other factors that we considered based on the past history of sales for the company to conclude that our target age audience would be between 35-55, both male and female. Finally, the analysis excluded households that income was less than £40k. We ended up with 73,000 records in postcodes EN, IG & E4. That’s a lot! In our example below we have shown the “return on investment” for both the lowest and highest return. Direct Mail is very diverse; if you are selling popular CD’s by mail then the percentage return may be far greater. We always err on the side of caution as illustrated below.

Direct Mail ROI Analysis
Here are the costs of a small campaign using just 1000 of the 73,000 records available:

Cost of Mailing List (1000)            280 (Multiple use list)
Cost of Paper & Envelopes             80 Average cost of a “run on” in stationery
Mailing Piece A6 Postcard             150 Always include something on interest
Postage                                   230 1000 x .23p Stamps
Total Cost                                 740
If you want someone to stuff envelopes as well, it could be more!

Average Return on Direct Mail (Dependent on Product)
Lowest                                            1%
Highest                                            5%

Projected Profit Per Car Sale =    £750

1% Return on 1000 Clients       10        x          750      7500
Expenses                                                                 740
Profit                                                                   £6760

So, we have said here that the minimum return would be 1% which equates to 10 car sales from this promotion.Now, if we look at it more postively then it could be as high as 5%

5% Return on 1000 Clients       50        x          750      37500
Expenses                                                                  740
Profit                                                                   £36760

Wow! What a fantastic return on your investment.

If you are selling to a list of potential clients with whom you have had no previous dealings then the potential of return is lower. If you are writing to a list of clients who have transacted business previously, then your sales opportunity escalate.

Allow us to plan a campaign for you….

We hope you found this information useful. We would like to remind you that this subject is best served, and more effective as part of a complete marketing plan or strategy, rather than in isolation. For further expert advice please contact us to discuss your requirements or post a question in our blog.

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