Measuring ROI With On-Site Purchases
by Mike Poirier
Normally, any project where we calculate return-on-investment (ROI) includes an essential component from the survey: purchase intent. However, on rare occasions, we employ a survey for an experiential program where we do not measure purchase intent. Here is an example of a program we measured earlier last year which fits that bill, and how we calculated its ROI.
We measured an experiential program for a beauty product that involved brand ambassadors (BA) engaging consumers at department stores to educate them about the product. Following the engagement, the BA would record observations of the consumer in a profiling questionnaire.
We collected the data to create consumer profiles that included gender, age (estimated), beauty product knowledge, preferred brands, and what other goods they had in their shopping cart/ basket.
The cornerstone metric of purchase intent was missing from the data. This was because the survey was completed largely through observations after the engagement. The client was still interested in the ROI of the program, so our traditional model needed to be revamped.
How we adjusted the ROI model
Thankfully, there were two key variables of comparable metrics that could be pulled from the data.
We needed the percentage of non-customers to estimate the number of new customers created. Consumers were asked what their favorite beauty product brands were, including the one sponsoring the event. So we calculated non-customers as follows:
% Non-Customers = % of consumers who did not mention the sponsored brand as a favorite product
Now we had a percentage of non-customers (58%). Next, we needed to estimate their purchase behavior. This is where the second key variable was utilized.
The BAs provided the number of sponsored brand products the consumer purchased as an immediate result of the engagement. We calculated an on-site purchase percentage as follows:
% Purchased On-Site = % of consumers who left with at least one sponsored brand product
This yielded a percentage of consumers who purchased on-site (89%).
The end result…
Those two metrics supplied us with the data needed to calculate the program’s ROI. Calculating at an average price of $8.99 and 1.55 items per cart, the ROI from on-site purchases was 325%.
We ran a sensitivity analysis by limiting on-site purchases to a minimum of two brand products (43%) to account for any bias stemmed from BAs limiting observations to satisfied customers. ROI remained positive at 157%.
The client was impressed with both the ROI model and the estimated return. We’re hoping this program’s success leads to an expanded experiential program in the coming months.
Photo Source: https://www.flickr.com/photos/retinafunk/