Are you thinking about carrying out a promotional campaign for your company, but you don’t know if it will be profitable or not? Today we will explain how to calculate the return on investment of your promotions and some tricks to make it easier to calculate it.
Within the world of promotional marketing, it is essential to calculate and evaluate the return on investment (ROI) of each strategy you implement. Calculating ROI will allow you to understand whether investments in promotions are generating benefits or not.
What is ROI?
ROI is a financial metric that is used to measure the profitability of an investment, that is, it measures the profits generated in relation to the value invested and serves to know if the returns justify the investment.
It is calculated by dividing the net profit of an investment by the cost of that same investment, the result of which is expressed as a percentage. A positive ROI indicates that the investment has generated profits and has been profitable, while a negative one indicates that the investment has generated losses.
In the context of promotional marketing, calculating the ROI of the promotional gifts you make for your brand allows you to evaluate whether the investment in these products has been profitable and has generated tangible value for the company, whether in terms of sales, brand recognition or greater customer loyalty.
How to calculate the ROI for your promotional gifts?
- Establish clear objectives: before making any calculations, it is important to establish clear objectives for your promotional actions. You have to be very clear if you are looking to increase sales, improve your brand recognition or promote customer loyalty. By defining these objectives correctly, it will be easier for you to determine what metrics and data are necessary to be able to evaluate the return on investment in a much more effective way.
- Calculate the costs of promotional gifts: Start determining the costs associated with the promotional gifts you plan to distribute to your customers. These costs are such as the unit cost per product, the costs of customizing and packaging them, shipping costs… It is important to take all expenses into account to get an accurate picture of the total investment made.
- Collect relevant data: important data must be collected to calculate the return on investment, such as the number of promotional gifts distributed, the number of leads generated through the gifts, the increase in sales, or any other data that is relevant to your established goals.
- Calculate the value generated: Once all the necessary data is collected, you can calculate the value generated by your promotional gifts. This involves adding the monetary value of the sales generated and any other additional benefits, such as increased brand recognition or improved customer loyalty.
- Calculate ROI: At this point, the ROI is calculated. It is calculated by dividing the value generated by the promotions minus the total costs and then multiplying by one hundred to give a percentage result.
- Interpret the results: Finally, you must interpret the results. If the ROI is positive, it means that your promotional gifts have generated greater value than the investment made. If the ROI is negative, you may need to review your strategy or consider adjustments to get better results in the future.
With all these steps and tips you will be able to effectively calculate the return on your investments. This way you will be able to have a clearer vision of the effectiveness of your promotional marketing investments and make informed decisions about what type of promotions you should use, how to personalize gifts and what the real impact is on your business.
