Return on Investment (ROI) Marketing Calculator

If you can establish the value of a new customer to your business then it is quite straightforward to decide how much to invest in attracting a new customer. In many cases the answer is to simply spend less on winning the new business than it costs. It may be more prudent to consider the profitability of the first few orders rather than just the first one. When considering ROI on marketing then the breakeven point (BEP) is a useful point to establish, as you at least know you are ahead from a cost point of view.

The long term view of ROI is based around lifetime value (LTV) and 3 years is probably as far as you need to go with that.

The key elements for the calculator are based around your existing customer profile. You need to know how many customers in total or you have for a particular segment of business. You need to know the average profit per order or margin per order and the average number of orders a customer will place each year. If you are undertaking a specific program for customer acquisition then you should consider what sort of attrition you will get over the period and ensure you have excellent customer support so more customers will stay with you. It is important to keep investing in your customers with service and marketing and it will cost you less to keep them than it did to win them in the first place.

If you would like an excel template then please drop me an email kevin@kevindjones.co.uk and I will send it to you.

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