Taking a Hard Look at the bottom line

A look at calculating Return on Investment (ROI) for your advertising dollars

By Erinn Morgan

In planning for success, looking at how your budgeted advertising dollars are performing is a wise move. While it might be appealing to cut back on—or cut out—your advertising budget, experts warn that this is actually the time to assure customers and patients that you are still in business. It is also time to offer them incentives such as specials or coupons.

"This is not the time to cut advertising," says Lisa Duncan of Duncan & Duncan Enterprises (www.lisaduncan.com), a retail consultant and speaker with over 25 years of retailing experience. "This is especially the time when you don't want to get out of people's sight."

Patti Thomas, director of retail operations at the 18-location Northeastern Eye Institute in Pennsylvania, agrees. "As a company, we haven't cut our marketing budget," she says. "We want to continue to be visible to all our patients."

Still, there is no question that businesses are scaling back on their ad dollars. "Right now, three percent of gross sales is what people are spending on marketing, including small businesses, big boutiques, and big companies," says Duncan, who notes that ad budgets are typically (in a healthy economy) five to 10 percent of gross sales. "It's easier to stretch dollars farther today with discounts available from local newspapers and radio stations, especially if you commit to a 12-month program."

Eyecare professionals can benefit by targeting their slimmed-down ad dollars to the mediums that deliver the greatest Return on Investment (ROI). Most experts agree that ROI can be difficult to track. In fact, the standard ROI calculation formulas only work if you can actually decipher the payback your business receives from advertising in a dollar value format.

TRACKING ROI

There are a few ways to track ROI, most of which depend on how you set up your advertising in the first place. In general, Duncan advises to simply watch your sales volume and make sure it is increasing.

Coupon Mania. Coupons are a hot consumer item and they are also easy to track. "On your ad, ask them to clip and bring in the coupon for a discount or free item with purchase," says Duncan. "Any way you can get them in your door with something in hand is the best way to track ROI." Track your coupon's effectiveness for 30 days to determine if it's a strategy to continue.

If a coupon is not in your plans, another way to track your print, radio, or television ad's effectiveness is to ask the customer to bring the ad in, or mention they heard it on the radio or on TV, for a free item or adjustment.

Getting the Most Bang for Your Buck

Where are the best-known places to put your dollars? A National Federation of Independent Businesses survey showed that small businesses had the most success with websites, flyers/circulars/handouts, newspapers, newsletters, bulletins, and direct mail. The same study showed the least frequent forms of small business advertising include television, value packs or shopper supplements, outdoor offpremise signage, radio, and magazines. The rundown below from BIGresearch paints a pretty clear picture for overall advertising effectiveness for all sizes of businesses. Also, know that today most mediums are negotiable, so getting your newspaper or radio ads might be less expensive than it used to be. "You can definitely negotiate in today's world, so if your local paper charges $500 for a 1/8th page, ask them if you run that ad a couple of times if you can get a discount," says Martin Lehman, a counselor with New York City-based SCORE (www.scorenyc.org), an organization that offers free counseling to small businesses to help maximize their success. "Yes, I believe in this economy you still have to do some advertising, but you can definitely negotiate on that."

Heard in the Aisles. If new customers are browsing in your optical shop, ask your salespeople to start a conversation and ask: "How did you hear about us?" Duncan recommends keeping a list behind the register with the top five ways customers hear about you. "This is just about training your employees to ask everybody that walks in the door how they hear about you," she says.

In Pennsylvania, Northeastern Eye Institute often advertises their educational eye surgery seminars in mediums such as digital billboards and "Post-It" notes on newspapers.

"When they come in for a seminar or call and register, we always ask ‘How did you find out about the seminar?’" says Patti Thomas.

Tracking Package. Newspapers and radio stations will often track your ad's effectiveness (or number of readers/listeners) for you. "I always ask if they have software that will help me track it," says Duncan.

Hit and Run. Hits to your own website are perhaps one of the easiest ROI forms to track. You can also track your pay-per-click volume with Google if regionally focused Internet advertising is part of your repertoire.

Pay-per-click advertising delivers results when someone types in something like "contact lens specialist Philadelphia" and your business pops up as a paid listing. Businesses bid on "clicks," so the higher they bid, the higher their listing appears. The average pay-per-click costs about $1. EB