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How To Measure ROI On Marketing For A Small Business

Over the course of the past few months, or even years, you might have spent a significant amount of time and money on marketing, but has it paid off? How much return on investment (ROI) are you getting for your marketing efforts? Which type of marketing is costing you the most? Which type of marketing is producing the best results? For each person or business that becomes a new customer or client, how much are you spending, on average?

If you do not have the answers to these questions, consider hiring a marketing coach. A small business marketing coach can help you implement a system to test and track marketing results. An experienced coach can also help you perform a competitor review, devise a marketing plan, set a budget, update your branding, and much more!

When it comes to marketing a small business, the investment comes in the form of time, money, or both. So to measure your ROI accurately, you need to calculate how much time and money you spend.

When measuring ROI on marketing, below are the primary factors.

Exposure / Visibility For Small Businesses

Getting the word out about a new product or service, increasing brand recognition for your company, and increasing goodwill are examples of exposure and visibility for a company. Unfortunately, they’re extremely hard to measure for offline marketing (anything that doesn’t take place on the Internet). And, they don’t necessarily lead to an uptick in business.

Examples of ROI for exposure and visibility: You spend $200 on ad in a local newspaper that has a circulation of 5,000 (your ROI is 4 cents per reader). Or, you spend $1,000 per month on search engine optimization and start getting 1,000 clicks a month to your website from Google, Yahoo, and Bing (your ROI is $1 per click).

Calls To Action For Small Businesses

Calls to action represent “leads.” Calls to action can include: price quotes or bids, free consultations, newsletter sign-ups, phone calls, and visits. Calls to actions are commitments from potential new customers or clients, albeit not necessarily financial ones.

Examples of ROI for calls to action: You spend $300 to attend a health fair and give out 15 free spinal exams (your ROI is $20 per spinal exam). Or, you spend $5,000 on radio advertising for a month and give out 40 interior painting estimates (your ROI is $125 per estimate). Or, you spend 20 hours networking to get 2 new clients (your ROI is 10 hours per new client).

New Clients, Customers, And Initial Orders For Small Businesses

How many new clients or customers did your marketing efforts bring in, and how much did those people or businesses spend initially (in the first 90 days, as an example). Calculate this, and you’ll know your ROI.

Examples of ROI for initial orders: You spend $600 sending a direct mail piece to people in your neighborhood, and get 3 new customers for your plumbing business who spend a combined $1,500 (your ROI is $200 per customer or $500 per order). Or, you spend 5 hours networking to get 1 new client who spends $775 (your ROI is 5 hours per customer or 5 hours per $775 order).

Reorders And Word Of Mouth For Small Businesses

Sometimes, marketing looks extremely expensive (in terms of time and/or money), if you only calculate initial orders from new customers and clients. But if you factor in reorders, and can eventually devise an average “lifetime” amount for customers and clients, the numbers start to make more sense. Add in word of mouth referrals, and that initial investment looks even better.

Let’s look at a scenario, from start to finish:

A dentist spends $5,000 on search engine optimization (SEO). As a result, her website traffic rises by 500 clicks per month. From those 500 clicks, an average of 10 people schedule free new patient consults. From those 10 new patient consults, 8 people become new patients, spending an average of $450 per patient in the first 90 days. Those 8 new patients, over the “lifetime” of their relationship with the dentist will go on to spend an average of $3,000 and refer 1 new patient. Watch how the money attributed to that initial $5,000 investment in SEO pays off:

$5,000 invested in marketing

8 new patients (cost of $625 per patient for marketing)

Amount the 8 new patients spend in the first 90 days: $3,600 (8 patients x $450)

Amount the 8 new patients spend in the “lifetime” of the relationship: $24,000 (8 patients x $3,000)

Amount of word of mouth business the 8 new patients bring in: $3,000 (1 patient x $3,000)

Total investment in marketing: $5,000

Total ROI on marketing: $27,000 (9 patients, at an average of $3,000)

Test And Track Your Marketing Efforts

You can test and track your marketing efforts by:

To adequately measure ROI on your online marketing efforts, you’ll need to install Google Analytics (or some other type of stats counter) onto your website. The program is free and shouldn’t take an experienced developer more than fifteen minutes to get working properly.

Google Analytics can track thousands of metrics, but the most important ones will be the number of: website visits; website visitors; frequently visited pages; referrals from other websites; organic search from Google, Yahoo, and Bing, and amount of time spent on the website.

Use Your ROI Data To Make Better Marketing Decisions

Now that you know your ROI on marketing, what’s next? You can use that information to make better marketing decisions. For example if you’re spending $75 on radio advertising to bring in a new customer, but direct mail only costs $50 per customer, ramp up your direct mailing. If you’re spending 10 hours per month to attend a leads group and getting 1 new client from it, but you’re spending 5 hours at chamber meetings and getting 2 new clients, attend more chamber meetings.

Information is power, and when it comes to marketing, the more you know, the more effective your marketing will be!

For information about how to calculate ROI on marketing, ROI on coaching, or to talk to a small business marketing coach! Schedule a free consultation with one of our small business marketing coaches, or e-mail

Click here to learn about how much you should spend on marketing in your business or to take a free marketing assessment.

Please make note: We provide coaching and consulting services for the small business owners in Denver, Colorado, and the U.S. For more information call now at (720) 312-8737, or e-mail