Analyzing the average check for certain types of sales is a difficult task. This is due to the wide range of values for different transactions. At the same time, the profit from sales with the same check may be different. This is due to factors such as delivery conditions, changes in logistics, differences in goods in orders, etc.
In this regard, it is impossible to make ROMI forecasts based on average indicators. However, it is possible to obtain data to calculate the actual return on investment in advertising.
Based on actual values, average values should be included in the formula and then discrepancies should be checked at regular intervals.
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Sales data stability
Let's say key sales people rich people data package leave the company. As a result, the conversion rate for both deals and payments will drop, which will reduce ROMI. In this case, the changes are not directly related to advertising activities.
Circumstances may vary. Marketing proposals where ROMI is a key performance indicator should be looked at more closely.
For example, new partners promise to increase the return on advertising investment from 200 to 400%, and set this as the main KPI. To solve this problem, contractors can disable contextual PR for low-margin products.
This will indeed help ROMI grow, but sales and profits will start to decline. Everything will be great on the reports, but for the business, this course of events will result in losses.
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What metrics to compare ROMI with
The ROMI indicator is not universal. It should be compared with other indicators. Let's look at several basic examples.
ROMI and CAC
By comparing your Customer Acquisition Cost (CAC) with your marketing ROI, you can determine how effectively your advertising spend is converting into new customers.
Example . Over the month, the company's PR channel costs amounted to 100 thousand rubles, which led to the attraction of 1,000 new users to the site. The average purchase receipt in the online store was 5 thousand rubles, and the profit from one client was 2 thousand rubles. Thus, over the month, the advertising campaign provided 2 million rubles of profit.
Let's make the necessary calculations:
ROMI = (Profit – Marketing Expense) / Marketing Expense * 100% = (2,000,000 – 100,000) / 100,000 * 100% = 1,900%.
That is, for every ruble invested in marketing, the company receives 19 rubles in profit.
CAC = Marketing expenses / Number of new customers = 100,000 / 1,000 = 100 rubles per new customer.
Having analyzed the two metrics, we can conclude that the effectiveness of the marketing campaign is confirmed: the costs of attracting new customers are significantly less than the profit they bring through their purchases.
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