Small Business Web Marketing: ROI

You’ll find that measurement is one of the most valuable and essential aspects of small business web marketing.

I guess it’s okay to shoot from the hip or go with a gut check. But honestly establishing, knowing and tracking your numbers is what it’s all about.

Sure, sometimes you’re going to go with an instinct for an estimate. That’s business. But you really shouldn’t forgo the data that will shape the strategic moves you make to protect or expand a company’s profitability.

The cost per action, for example, deals with the quantity. Cost per lead as much the same. You could receive a number of calls or web based forms. Each of these should have value to you as a business. You can determine the average sale of a number of products, a type of product or specific product you’re really focusing on.

Let’s say a set of products brings in $20,000 every time one is sold. But something led to that sale – whether it was an advertisement, a tradeshow, a referral from another satisfied customer or a web based form with a compelling call to action. How many leads do you really need to get a sale? Is it 10, 20, 30 or more?

Scores of businesses just don’t know. Online marketing is a good place to begin. You can tell already that leads have value. You take the average sale divided by the number of leads and now you have the value of a lead. Let’s say that $20,000 product requires 20 leads on average before someone buys. That means each lead is worth $1,000.

If you’re investing in an online marketing specialist, you need to look at how much you are spending to generate those leads. You don’t want to just get your money back. You need to generate much more revenue than the money you paid out to get a great ROI – given advertising costs, consultants’ bills, your fixed costs for the products, labor, and many other factors.

Online Marketing Solution Should Equal ROI

Small business owners sometimes find fault with an online marketing solution simply because they don’t understand it.

They’re used to doing things the old way.  And they measure success by overall company sales.  It takes effort to understand the impact of any advertising campaign, including initiatives with online marketing.

The best thing to do is look at how you’re advertising today and compare that to how you advertise online.  What performs better?  And I would caution against looking at the lowest cost per lead as a sign of success.  Why?  The source in the nature of a lead will dictate the true value.  In other words, your cost per lead for one product may be $50 and you can bring in $10,000 and revenue.

Leads for another product could average $80, but maybe the revenue reaches $30,000 – all because of the market you target it and the leads you received.

I remember one executive who missed the mark with ROI.  In his situation, I suggested a 700 percent ROI.  He was less than thrilled at that prospect.  He recommended 2,000 percent.  After all, his business had grown a lot the last year and he wanted  the company to continue to grow at a good clip for each of the next five years.

As it turns out, he did not have a good handle on the ROI of his current advertising efforts.  His success and projections were based on sales he generated from existing customers.  I guess that’s advertising.  But the comparison certainly wasn’t fair.  Online marketing isn’t easy.  And yes, there are many risks.  But often you will find that online marketing can cost less than the other two forms of advertising.  Give an online marketing specialist a shot and see what difference it makes for your business.