Simple steps to calculate ROI

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Rob Petersen

ROI doesn't have to be complicated. Here are steps to calculate ROI that are surprisingly simple

Marketing

8 surprisingly simple steps to calculate ROI

#1. Start with a baseline
Scenario #1
New Business
Baseline = 0
Scenario #2
New Venture
Baseline = Prior
Period
Scenario #3
Company
Transformation
Baseline = % of Total

#2. Decide if return is profit or revenue
Profit? Revenue?

#4. Define inputs for the return
Return
• Repeat customers
• New customers
• Average customer
value
• Conversion rate
• Operating gains
• Cannibalization
• Churn

#5. Identify investments
Investments
• Marketing
• Promotion
• PR
• Website
• Infrastructure
• Staff
• Overhead
• Cash flow

#6. Calculate the ROI
(RETURN – INVESTMENT) ($)
INVESTMENT ($)
X 100%
($675,000 – $200,000) = $475,000
$200,000
= 238%

#7. Measure regularly with KPIs
KPI Period 1 Period 2 Period 3
Sales
Average
Customer Value
% New
Customers
Website Visits
Traffic Sources
Conversion Rates
Facebook Likes
BusinessWebsiteSocial

#8. Align with business objectives
$1,000,000 is our
goal. ROI is 238%
We have a great
team; we’re on a roll;
we can do it!

Questions on ROI for your venture? Contact
Rob Petersen
President
5 River Road, Suite 205
Wilton, CT 06897
P 203.594.1701
C 203.231.6434
rob@barnraisersllc.com
http://barnraisersllc.com
10

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Simple steps to calculate ROI

1. 8 surprisingly simple steps to calculate ROI

2. #1. Start with a baseline Scenario #1 New Business Baseline = 0 Scenario #2 New Venture Baseline = Prior Period Scenario #3 Company Transformation Baseline = % of Total

3. #2. Decide if return is profit or revenue Profit? Revenue?

4. #3. Determine the time frame

5. #4. Define inputs for the return Return • Repeat customers • New customers • Average customer value • Conversion rate • Operating gains • Cannibalization • Churn

6. #5. Identify investments Investments • Marketing • Promotion • PR • Website • Infrastructure • Staff • Overhead • Cash flow

7. #6. Calculate the ROI (RETURN – INVESTMENT) ($) INVESTMENT ($) X 100% ($675,000 – $200,000) = $475,000 $200,000 = 238%

8. #7. Measure regularly with KPIs KPI Period 1 Period 2 Period 3 Sales Average Customer Value % New Customers Website Visits Traffic Sources Conversion Rates Facebook Likes BusinessWebsiteSocial

9. #8. Align with business objectives $1,000,000 is our goal. ROI is 238% We have a great team; we’re on a roll; we can do it!

10. Questions on ROI for your venture? Contact Rob Petersen President 5 River Road, Suite 205 Wilton, CT 06897 P 203.594.1701 C 203.231.6434 rob@barnraisersllc.com http://barnraisersllc.com 10

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