Anyone who’s read a business book or gone to college should know ROI is a number derived from a simple mathematical formula.
Ian Sohn over at Flagged For Follow Up made that statement on a blog post about ROI. He’s absolutely right. Here’s a simple mathematical formula:
1. How much revenue do you want your advertising to generate each month?
Pick a realistic number. In my hypothetical example, I’ll use…
2. What is your average sale?
If you have multiple products, think about what your average customer spends.
3. [Now divide $1,000 into $5,000.] The number of sales you need is:
4. How many prospects must you speak with to make 1 sale?
5. [Now multiply 5 sales x 6 prospects.] The number of calls you need is:
So to sum it up, 35 calls a month would result in 5 sales and bring in $5,000 a month.
This is an example of what a transmission shop could expect from Yellow Page advertising.
Remember in my previous post that I said you could get significant advertising in many independent directories for less than $3,000 a year? Spending $3,000 a year to get $5,000 a month x 12 (i.e., $60,000) is a 20:1 return on your investment.
And they say Yellow Page advertising doesn’t work…