ROI

"Half of the money I spend on  advertising is wasted; trouble is I don't know which half." 

-- John Wanamaker.

Marketing dollars have always been difficult to track the actual value of. The only thing brands can be absolutely certain about is that if they do not spend on advertising, they have less sales. It is complicated to quantify. The era of digital marketing set the expectation that advertising efforts are easy to track. This is because of the granular level of data you can find out. You can A/B test creative, apply heat maps to see where potential clients are scrolling and clicking and you can judge pay-per-click ads by click through ratio which are all important tools for savvy marketers to utilize, however, just because you know the blue call to action button doesn't perform as well as the red, doesn't mean you are able to put a concrete dollar amount on the actual value you are driving to franchise owners.

Key Performance Indicators (KPIs) are what your vendors and marketing teams typically provide which may include impressions, clicks, cost per click, click through ratio, leads and cost per lead. Cost per lead is the most important metric because it can be used to decide how much you will need to spend to get your desired volume of leads. If you are able to then calculate your conversion rate of those leads to sales, it will give you an even clearer picture of what you want to spend.

Key Considerations

1. What is your average sale? If you sell widgets that are all $X it is much easier to calculate than if you sell custom products that have a wide range. It may help to use median instead of average.

2. What is your customer lifetime value? Calculating the return on investment on the first purchase is painting a picture that is too limited. Customers may come in from an ad and purchase a smaller item from you first before they become repeat customers and buy your top-line products months or even years later. Not accounting for this is selling your marketing efforts short. Again, it's easier if you know most customers purchase a widget for $X every 6 months than if your sales cycle varies greatly. 

3. The lead is only as good as the follow up each lead receives. If you have a staff member who is not following up on leads in a thorough and timely fashion, the sale will be lost and it isn't worth driving leads if you don't have a solid plan for this established in advance. 

Solutions

1. If you are able to automate any of the tracking through technology, it can streamline the process significantly. For example, if a lead comes in through the website, if the source can be pushed from the website to the customer retention management (CRM) tool or Point of Sale (POS) system, it is worth the effort to implement this wherever possible.

2. If you have to periodically match the data manually, it is worth the time to do so. For example, if the systems do not talk to each other, it is worth comparing the leads that came in through the website to the customers who actually purchased and match them up to the respective dollar amounts. You may need to do this at a regular cadence, maybe quarterly or so, to be able to attribute these dollars. If you are able to do this for franchise owners, it adds value.

3. Provide education and training for owners on best practices on how to track and calculate these figures based on your business model. Depending on your structure, you may not be able to do this for the franchise owner and you may need to engage them to participate. Prove the value of doing so to the owner and it will also prove the value of spending marketing dollars.

Beware: in most point of sale systems, when someone is asked how they heard about the company, customers and business owners alike can get into the bad habit of choosing the first option in the drop down instead of taking the time to select the correct option. 

Franchise owners can use the following as a template to track spend and build a marketing plan.