Can You Know If Your Marketing ROI Is Working For Your Retail Business?

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Most retail business owners are frustrated with their marketing costs because they don’t know how to calculate best their return on investment (ROI) for the money spent.

That’s usually because they have to justify their budget to a partner or CFO.

This past week, a client told me a “business expert” said she felt branding and marketing had virtually no relevance to small, family-owned businesses since its expense and demand on resources is beyond the ability of most family-owned businesses to execute.

The woman said a small business shouldn't bother wrapping a vehicle because it won't change anyone's behavior or educate them about the business.  She also said that if two pool companies show up to bid on a job, no matter what their branding looks like, the one that charges less will get it.

My client wanted to know what I thought...

I said well, first, price doesn’t make something a good value.

Look at the largest recall in auto history today because automakers wanted to save a couple of bucks on their airbags. Takata came in with the lowest price and got the job. With disastrous results.

Everyone’s had an experience with a lowball price and the disappointing story to go with it.

If it were all about price, no one would be in business.

Second, you’ll never know the effect marketing has as a cause and effect for influencing customers’ behavior.

As Daniel Kehrer says, “Calculating ROI oblivious to the business objectives context is like trying to keep a game score without even knowing what sport you’re playing – a fruitless endeavor to be sure.”

So in order to try to justify costs, you need to remember the three steps in your buyer’s journey to your product or you.  

In the first step, Awareness, they realize they have a problem. In step two, Consideration, they define their problem and seek ways to solve it, and finally, in the Decision stage, they choose a solution.

Here’s an example of a window-covering store customer:


I’m tired of the sun waking me up every morning because I work late.


Aha, I have crappy window coverings. What are my options for keeping out the sun in the morning? The drapes take longer to get, but the shutters won’t be as room-darkening.


I’m going to buy the drapes, but from who? I’ll do a Google search for top results in my area. “Oh, what was that ad I saw? What’s that company with the van down the street?” I’ll see their website and ask my friends for their recommendations.

Most marketers only look at influencing an incremental sale - the Decision stage. That’s why so many put a coupon into every ad, for proof their ad brought the customer in.

Sorry, attributing every purchase to a post, coupon, or campaign is just not that easy. 

If you consider all the reasons customers come into your store - if you market to their awareness reasons and consideration reasons, and not just to their decision reasons - you will have several messages that build up your brand and, at the same time, eliminate your need for discounting which will lead to higher profits.

This, of course, is what anyone is searching for when they start promoting themselves...higher profits.

So if you were the window coverings store and wanted to increase your brand awareness, one message on your wrapped truck could be, “Put a stop to the sun in your eyes!" Your consideration ad could read, “Shutters, curtains, or blinds? We have all the options.”

Measuring how your ad or billboard grabbed potential shoppers’ awareness or how many new customers you gained will always be complex. But you still have to create a brand that shoppers know and deliver service beyond compare.  The bonus of word-of-mouth will help bolster your advertising efforts as well.

That's not to say you shouldn't look for cause and effect with your marketing. The HBR noted in this article that a company "found that organic visits to the website and display advertisement click-through all increased disproportionally in a region when consumers there were also exposed to TV ads. This experiment motivated the firm to better coordinate their marketing campaigns across media channels."

You need an arsenal of tools to build awareness for customers considering changing their brand or acquiring a new product. Some are looking for information - awareness, and some have information - consideration.

You need a variety of means to reach them in the consideration phase so they understand what solutions you have that make you stand out from the rest and when they are in the decision stage to choose you in the first place or to come back and shop more often, or to refer you to a friend.

Van wraps, billboards, blogs, and those types of things attract people who need what you sell.

Responsive websites, paid search, SEO, and other digital tools are excellent at attracting shoppers to consider you as their answer. 

Well-done videos, case studies, pictures of your product in actual customers’ homes, and testimonials help you close the sale when the customer is in the decision stage.

And, of course, I would be remiss if I didn’t say retail sales training is necessary because the final discovery phase is usually in your physical store.

See also, How And Why A Retail Salesperson Should Create A Personal Brand

In Sum

It always shocks me when I see a retailer having a going-out-of-business sale.

Where is the first place they advertise?

In the newspaper.  Talk to most any newspaper representative and they’ll tell you the company never ran an ad before claiming there was no return on investment.

There is an ROI, just make sure to not expect it to be as clear as number-of-coupons redeemed, and make sure you spend more time in the awareness and consideration stages of your buyer’s journey.

Promoting your business, like retail sales training of your crew, is an investment. It is not an expense.

If you want to succeed, the focus has to be on how effective your message is to each of the three distinct segments of a shopper’s buying journey, and not on whether the $200 ad you ran once in the freebie weekly got enough coupon-clippers to justify the cost.