Calculating ROI

By: Trademagazin editor Date: 2018. 02. 25. 19:20

In 2018 POPAI Hungary Association will focus its work on ROI calculation. Calculating return on investment (ROI) is more and more frequent in marketing too. In this segment the ROI number shows how marketing costs relate to the profit realised by the campaign. According to a paper published in 2017 by international in-store marketing organisation SHOP!, we need three baseline sets of data to build the ROI equation: 1. in-store execution data on a store-by-store basis, 2. cost factors, 3. performance data. The key to measuring the success of any in-store marketing campaign is to have clearly defined goals. Choosing the right tool to measure the goal is also critical.Attainable goals and measurable KPIs are essential to the success of a programme.

From the data a so-called actionable insight needs to be prepared, which can help in planning future campaigns. In-store execution data: Building an understanding of in-store execution compliance is critical to delivering accurate ROI numbers. Cost factors: 1. There is a pure ROI model, in which the costs associated to the production of the display, product, and marketing are calculated. 2. There is a more complex GMROI model (gross margin return on investment) that takes into account the total supply chain. Performance data: Performance metrics will vary depending on the company, sales, profit or a blended metric to understand the performance of the display.

Factors that influence the performance of a display: 1. Ongoing promotion or sale –Promotions and sales can influence the display forecast within total sales, as well as how much inventory will be needed to support them, 2. Availability of inventory – inventory availability and balancing within a store is a major influencer of a display’s success, especially when promoted, 3. In-store execution – in-store execution does not end when the display is installed. It continues through the life of the display. //