Calculating Marketing ROI & Have You Put Enough “I” In?

TweetQ:  What does every business have in common?

A:  The intent of every [for profit] business is to make money.

Whether it is for thousands of stockholders, an ownership group or just for little old you — owner of Tiny & Mighty, Inc — that business needs to earn money for someone.

Calculating ROI  – And The Two “I’s” in ROI

Example 1:

I put $1,000 into a one-year bond and cash out $1050 — the ROI is 5%.

There is only one “I” in this first example — CASH.  The “Investment” was $1000.

Example 2:

You put $5,000 into marketing a start-up tiny business and one year later have $2,000 — the ROI is -60%.

It’s as simple as that.  It’s very easy to calculate.  You are a loser!  Right?

Bologna!

You may very well be a loser.  But you may be a much bigger loser than $3,000 — and [believe it or not] you may be a WINNER.

The trouble with this calculation is that it only considers one “I” that has been spent over the year.  It only considers CASH as an investment.

The “INVESTMENT” that is not so easily measured is sweat.  Hard work.  Time.

And the question isn’t just — Did you sweat? — but did you sweat intelligently?

What We Can’t Calculate About That $3000 Loss

• Did you learn a new skill?  That’s valuable.
• Did you become a smarter business person?  That’s valuable.
• Did you grow your network?  That’s valuable.
• Did you build good will with your network?  That’s valuable.

The point?

You can’t properly calculate the “I” in that $3,000 loss.  Calculating marketing ROI or any return on investment for that matter is a much more complicated matter than it appears on the surface.

You may have lost much more than $3,000 over that year — you may have lost valuable time and energy learning the wrong things, meeting with the wrong people, attending the wrong seminars, reading the wrong books,  etc.

Or —  you may have gained some insight, information, connections or experience that will turn that $5000 investment into a profitable business.  This is what cannot be calculated in a nice, neat mathematical equation.

The growth of your tiny business cannot be measured in CASH alone — there is another type of investment that is, perhaps, a more important determinant of your success.

What about you?  Have you put enough “I” into your tiny biz?  How do you calculate ROI on experiences, connections, etc?