You already know how important ROI is to a business.
Whenever you invest money into something, it’s because you expect to get more back.
However, most boat dealers have no idea what their marketing ROI is. They’re spending their marketing budget without knowing what it brings them back.
It’s a real problem. It means you could be losing money and you’re not even aware of it. It means there could be better opportunities to invest in and you’re not seeing them.
Here is a simple formula to show you how to calculate your ROI and finally know the value of your investments.
How much do you spend for a lead?
A lead is a person that has shown interest in becoming one of your customers by talking to you over the phone, coming to your dealership, signing up for your newsletter or visiting certain pages of your website.
How much are you currently paying for a lead? If you run online ads, it is very easy to know. Just look at the price per conversion in the analytics programs (most online advertising platforms provide one for free).
Know your conversion rate
Now, try and calculate how many of these people convert into customers. An easy way to do that is to look at how many people in your mailing list became your customers.
Note that your conversion rate will vary depending on the channel used, so if you have access to more precise analytics that include all your marketing channels, your ROI calculation will be more accurate.
Presenting your conversion rate as a percentage makes it easy to calculate your ROI and your profitability. If your conversion rate with Google ads is 0.5%, for example, it means that you will on average have a purchase for every 200 people who clicked on your ad!
Calculate your ROI
Combining this information with the average profit you make on a sale will give you your return on investment.
With your conversion rate, determine the number of leads you need to attract before someone buys a boat. You can then calculate how much you have to spend in marketing for that purchase.
Now, compare that number to the average profit you make on a boat. You have your marketing ROI.
Get more precise
ROI can be measured with more precision by calculating it separately for different channels or boat models.
When you’re experienced with analytics programs, you can combine data from your different marketing initiatives and allocate them an importance factor according to their place in the buyer’s journey. That way, you will have a sense of which elements in your strategy are the most effective and which ones you can improve.
Ready to grow your dealership online? Get your free digital marketing audit.