Question

Topic: Research/Metrics

Source Tracking: How To Analyse Roi

Posted by Anonymous on 250 Points
We are a relatively small business with about 30 employees and $450,000 in monthly sales. We sell construction material directly to homeowners and contractors. In our business, customers purchase our systems only a few times per year (3-4 times).

When a contractor purchases a product from us the first time, we assign him a source if we know where he found out about us.

That's how we work out ROI for our advertising programs (online advertisements, print advertisements, tradeshows, etc).

If they purchase from us a second time, the source of the second sale is the same (source 1).

However, if they purchase a second time, but with a coupon from another source (source 2), how would you work out ROI?

If the sale is $1,000, do you think that source 1 should get $500 and source 2 $500 as well?

If the second sale happens a long time after the first sale, it might make sense to assign $800 to source 2, and only $200 to source 1.

What about the third sale? Would you also split it $500 for source 1 and $500 for source 2.

What would you do? I would appreciate your feedback. Thank you!

Nicolas

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RESPONSES

  • Posted by Pepper Blue on Member
    Hi nmottet:

    I also commend you on your awareness of the importance of ROI.

    I think most experts will agree that as long as the results are measurable and you can either use that information to improve on the marketing efforts or get rid of them, it doesn't matter what method you use.

    Bottom line: As long as you use it to improve moving forward, then it is acceptable.

    A couple of good Marketing Prof articles here for you:


    https://www.marketingprofs.com/3/livneh3.asp
    https://www.marketingprofs.com/2/livneh2.asp

    I hope that helps.

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