Modeling Return-on-Investment of In-Store Demos

Written by PortMA

Modeling Return-on-Investment of In-Store Demos

I had the pleasure of speaking with the team at Shopper Events about strategies for modeling return-on-investment (ROI) for retail product demos. One of the things we discussed was how to think about ROI and the role it plays in business. We also talked about making it simple – something everyone can get their head around from the start.

Making In-Store Demo ROI a Tool – Not Just an Indicator

At PortMA, we believe ROI is a tool – not just an indicator. Granted, it does indicate how well your marketing performed or is performing, but it’s more useful as a tool to identify where and when you should change your strategy.
There are many variables that go into the development of an in-store demo program; so many choices a project lead must make. Each of these either aid or hinder the program ROI. The trick is knowing what helped and what didn’t.
This is where you use ROI as a tool. It’s one thing to say the program had a return on investment of 164%. That’s your indication that the marketing had a positive return. But after that, it does nothing for you.
It’s a very different thing to say that Sunday activations averaged a 224% ROI, however, while Saturday averaged 117%. This is telling.
It tells you that you need to figure out how to get more done on Saturday; that you need to either move your event days around or, if you can’t, at least you can try to get more hours in on Saturday.
Either of these moves will increase the overall program ROI.
Simply put, when you do more of what’s working well, you’ll bring up your average. You just have to make sure all of the things that represent choices you made during the design phase of your in-store demo program are held as variables that can be used to segment your ROI results. That is where you’ll find your roadmap to success and deliver truly actionable insights every time.

How to Keep In-Store Demo ROI Modeling Simple

We also talked about keeping it simple.
Many Shopper Marketing ROI Models are needlessly complicated. I’ve seen page upon page explaining the life-time value of a customer, as if all that extra work is going to legitimize the model.
What it does is confuse everyone. Unfortunately, people shy away from what they don’t understand. Especially in business.
How do you make it simple?  For example, when it comes to the value per customer in your ROI model, start with the average revenue per SKU and the estimated number of buys per year.
If you have a product that is purchased four times a year and the average purchase price is $10, your annualized customer value is $40.
Sure, there will be times when you can look at lifetime value or the value of a loyal customer versus a passive customer. You can take future-year revenue and treat it as an annuity. You can consider profit over revenue. You might even look at regional average SKU and purchase volume.
All of this will help increase the quality of your ROI model, but it should only come later, once you’ve developed the model, the team is using it, and things are going as planned.
Don’t make it overly complicated to start. You’ll never get it off the ground.
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