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10 most common mistakes in calculating ROI 0

Posted on December 02, 2018 by Rob Petersen

 

calculating roi

Calculating ROI (Return on Investment) is based on a simple formula involving the gain from an investment, the cost of the investment and the resulting ROI. Here it is:

calculating roi - roi calculation

Yet, to many, it is one of the most desired but vexing business measurements. Why?

Here are the 10 most common mistakes businesses make in calculating ROI.

  1. CONFUSION BETWEEN CASH FLOW AND GAINS: A common mistake in calculating ROI is comparing the initial investment, which is always in cash, with the gain as measured by profit or (in some cases) revenue. And not basing the gain on cash flow. For example, customers might be billed but that doesn’t mean they all pay on time. Or shipments might have gone out. But some goods might have been returned. The correct approach is always to base the gain, either profits or revenue, on the cash flow received.
  2. UNDERESTIMATE INITIAL COSTS: Many businesses try calculating ROI without first properly accounting for all initial costs. As a result, they may end up underestimating initial costs. Before you start your calculations, know what your initial costs are. Here are some of the areas that might be missed.
  3. FAIL TO INCLUDE PEOPLE’S TIME: One of the reason ROI is a highly regarded measurement is it includes not just out-of-pocket costs but operational costs like labor. Most business owners are aware that time is money for any company. However, when it comes to calculating ROI, they forget to consider the value of their time or that of their employees.
  4. DON’T KNOW THE MINIMUM RETURN REQUIRED: Take into consideration the minimum ROI that your company requires because there probably is one. Look at the relative risks, cost of capital, and opportunity costs. Here’s what experts say is a good ROI for various industries. Even if it hasn’t been formally stated, have the discussion to bring it out when you start calculating ROI.
  5. MEASURE THE WRONG THING: In 2010, Pepsi launched the Pepsi Refresh Project, an initiative where people could submit and vote for their favorite nonprofit projects to receive grants from Pepsi. The project generated 3.5 million Facebook likes, 60,000 Twitter followers, and over 80 million votes for nonprofits. But it didn’t sell more Pepsi. Pepsi cancelled the project in 2012 after falling from second to third place in national soda market share. It was a noble initiative, but likes, followers and votes were not the right measurements for ROI.
  6. MEASURE TOO MANY THINGS: In data-rich environments, it’s easy to lose sight of the metrics that really matter. Before calculating ROI, know the Key Performance Indicators (KPIs) for your business. KPIs are the metrics that matter for any business. They are metrics that, just like your ROI, have a target. If you don’t know them, you may find yourself measuring too many things.
  7. DON’T LEVERAGE EXISTING CAPABILITIES: A manager at a large wireless telecommunications firm recently called for help with her budget. She’d “taken a stab” at quantifying the ROI for the company’s data warehouse and wanted to review her calculations. Her worksheet—which included a rigorous mix of hardware, software licenses, maintenance, burdened staff, and consultant costs, etc.—made clear that she’d forgotten an important step: Leverage current IT infrastructure and resources to reduce cost estimates and make a project more attractive to business executives.
  8. DON’T GET THE BUSINESS TEAM INVOLVED: No one wants to own ROI. Calculating ROI can be difficult; understanding all the required skill and resource components can challenge even the best manager. When the planning phase of a project occurs, most managers take it upon themselves to calculate ROI on their own. It’s important that baseline ROI numbers are adopted by a team and accepted by the key business stakeholders.
  9. DON’T ACCOUNT FOR THE FULL SALES CYCLES: In the B2B buying process, it can take many months for a prospect to go from first touch to closed sale. If you try to calculate your ROI too soon, you may undervalue the amount of impact that investments are making. In the B2C buying process, it may take time to generate awareness, educate consumers and gain trial. But, once you do, buying frequency might increase at that point. Pick a time period to measure your ROI that makes the most of the resources invested.
  10. DON’T ACCOUNT FOR CHANGE: Nothing is certain. You can’t know what competitive developments, new trends or surprises might occur during the measurement period for your ROI. So don’t treat ROI as an area that you “set and forget.” Look at it regularly. Evaluate against KPIs. And be prepared to make revisions as necessary. Anything worth measurement should be view with the most current data.

Do these mistakes help you to understand the correct way to calculating ROI. Does your business need help in doing and managing ROI.

22 affiliate marketing cold, hard yet amazing facts 0

Posted on November 18, 2018 by Rob Petersen

affiliate marketing

Affiliate marketing is an advertising model where companies (merchants) pays commissions to third-party publishers (affiliates) who generate leads or sales by featuring the company’s products and services on their websites or blogs.

Affiliate marketing has been a proven business model since 1994, just four years after the origination of the internet. It is one of the only marketing channels and forms of  commerce where no money is exchanged until mutually agreed-upon results are achieved. One can be either a merchant or affiliate with very little, if any, investment.

It is relatively easy to begin. Merchants and Affiliates sign up at reputable affiliate marketing sites such as Commission Junction (CJ), Clickbank, Ratkuten, PeerFly, ShareASale, Wide Markets and Amazon Associates to name some of the top sites. After completing the sign up process, code or text links are provided for the merchant and affiliates to put on their websites identifying any actions that come from their relationship.

Is it worth it? Here are 22 affiliate marketing cold, hard yet amazing facts.

  1. 90% of traffic and conversions to affiliate merchants’ programs are driven by 10% of affiliates.
  2. Over 80% of brands have affiliate programs.
  3. 78% of CMOs admit affiliate marketing is their least mastered area of digital marketing.
  4. 71% of consumers are more likely to make a purchase based on a social media reference.
  5. 67% of affiliates come from North America (US and Canada).
  6. 66%% of affiliate programs fall in into 4 categories: Fashion (23%), Sports and Outdoors (18%), Health & Beauty (14%) and Travel (11%)
  7. Nearly 50% of affiliate related traffic originates from a mobile device.
  8. 55.5% of affiliates work from home.
  9. 48% of affiliates make under $20,000 a year; 20% make $20,000-$50,000 a year; 6% make $50,000-$100,000 a year; 6% make $100,000-$150,000 a year and 3% make $150,000+ a year.
  10. 40% of marketers say affiliate marketing is their most desired digital marketing skill.
  11. 38% of marketers call affiliate marketing one of their top customer acquisition methods.
  12. More than 30% of affiliate-related sales originate from a mobile device.
  13. 16.6% annual growth is expected through 2021.
  14. 15% to 30% of all online sales are generated by affiliate programs.
  15. 10% to 15% conversion rate for pay-per-call affiliate campaigns vs 2% to 3% for online affiliate campaigns.
  16. 10% of Amazon’s sales are estimated to come from affiliates.
  17. 7.5% of total digital spend for retailers goes to affiliate marketing.
  18. $5 billion in revenue was generated last year in the US by affiliate marketing.
  19. $5 billion in revenue was generated last year in the US by affiliate marketing.
  20. 600 million products are promoted online by affiliate programs.
  21. Over 2,000,000 affiliates were on Amazon as early as 2008.
  22. 1,000,000+ affiliate accounts are registered on ShareASale.

Do these facts convince you affiliate marketing is worth it? Is your business interested?

11 geotargeting case studies prove location is everything 0

Posted on November 11, 2018 by Rob Petersen

geotargeting

Geotargeting is the practice of delivering content to a user based on his or her geographic location. This can be done on the city, zip code or address level via IP address or device ID. Or on a more granular level through GPS signals, geo-fencing, and more.

Geotargeting is an obvious choice with any internet based campaign for a local business like restaurants, realtors, doctors and anyone whose customer base is concentrated in a specific area. But it also can be a better way for larger, national brand to achieve higher results by recognizing regional strengths, key cities, key accounts and differences in target users.

Who is doing geotargeting and making a difference? Here are 11 goetargeting case studies that prove location is everything.

  1. AT&T: Offered consumers ShopAlerts, which consisted of messages, offers, rewards or coupons sent to their mobile phones when they were near a store or brand. The pilot included eight major marketers, four of which—Del Monte, Kmart, MilkPEP (the Milk Processor Education Program) and SC Johnson. With a nearly 100% open rate on the alerts, 50% of consumers who opted in to receive messages from the brands wanted more information. In some cases there was a 22% to 25% purchase conversion on some of the offers.
  2. ASHEVILLE, N.C.: A river city that sits near the western border of North Carolina, wanted to determine which ad vendors and platforms perform best for inspiring people to visit. Asheville looked at how quickly ad vendors and partners motivate travel to the city. When Asheville aimed ads to residents of nearby Raleigh, N.C., between January and September 2016, the percentage who arrived within seven days was 16.8% higher than the average of all other markets during the same period.
  3. BROWN FORMAN: Maker of Herradura, partnered with Foursquare for geotargeting to let premium spirits drinkers know where the boutique tequila brand is available. During the holiday season, Foursquare used Brown-Forman’s list of “accounts” where the brand is sold to target programmatic mobile and desktop display and video ads for Herradura to people whose mobile devices were found near those shops, bars or restaurants, or had been seen there in the past. Foursquare ads resulted in 23% incremental lift in visits to places selling Herradura among people who were exposed.
  4. FIVE GUYS: Monitored a variety of different hashtags on social media through Hootsuite to react quickly to negative experiences and to reach out to those individuals who are either trying Five Guys for the first time saying they enjoy the food. They respond to messages and improve customer service and sales.
  5. HYUNDAI: Had a sales problem. The brand was falling out of consideration when people went to car dealerships because, the company believed, consumers thought its cars were “staid” and “cheap.” A campaign code-named “Dealer Stealer” was created. The geotargeting process digitally mapped 115 Mazda, 282 Toyota, and 152 Hyundai dealerships. Those who came into proximity of its rival’s stores had their “unique and anonymous” device IDs collected, allowing the display of Hyundai advertising deals on the smartphones of people who were in the market for a Mazda or Toyota. The campaign attracted 815,000 unique eyeballs viewing the ad, according to the case study, with 41,000 people “reconsidering Hyundai as an option.”
  6. LEXUS: 1 in 3 shoppers use their smartphones to search for information when in the market to purchase a new vehicle. The Regional Lexus Dealer Associations set out to target affluent in-market car consumers in the African American and Hispanic communities across four different cities in the US. They executed a mobile-to-store campaign with Walton Isaacson and S4M and was able to boost foot traffic into dealerships by 3.8 times.
  7. PERNOD RICHARD: Which boasts brands including Absolut, Chivas Regal, Jacob’s Creek, and Jameson – had the aim of reaching consumers in transit at airports and driving them to the duty free store. A mobile campaign geo-targeted international terminals and provided travelers with a map and directions to their nearest duty-free store on a customized landing page. Over the month-long period of the campaign, 306 visits into duty-free stores were measured – with 126 incremental visits attributed from the campaign. Monday was the most effective day, generating 20 per cent of visits.
  8. STX ENTERTAINMENT: Aimed to measure the impact of digital ads on ticket sales for “Bad Moms,” a summer comedy featuring Mila Kunis, Kristen Bell and Christina Applegate. STX targeted ads mainly to women aged 18 and over. Women who were exposed to the ads were 22% more likely to have gone to see “Bad Moms” in the theater, and STX saw incremental ticket sales of over 428,000 more tickets for “Bad Moms.” In addition, the campaign turned every $1 spent on digital advertising into $2.31 in incremental ticket sales.
  9. TIMBERLAND: Had the goal to change perceptions of a “boots-only” brand and increase sales of their new boat shoes. Audience Targeting was used to reach young urban fashionistas seeking real adventures, and to drive awareness of the new SensorFlex boat shoe range among this key group. Location Targeting was used to identify those in the market for footwear and those in close proximity to key stores. The campaign generated +25% increase in store visits and won Best Use of Location Services at the Drum MOMA Awards.
  10. URBAN OUTFITTERS: Used dynamic audience filters to deliver messages based on shoppers’ real-world locations. For example, the company sent push notifications promoting party dresses to females who had recently visited bars and nightclubs. The targeted campaign resulted in a 75% increase in conversions and a 146% lift in revenue.
  11. WHOLE FOODS: Placed geo-fences around a number of store locations. Shoppers who entered these geo-fenced areas saw special offers on their smartphones. Whole Foods also took part in a practice called geo-conquesting by targeting ads to consumers visiting nearby supermarkets and encouraging them to come to Whole Foods in exchange for better deals. Together, the campaigns resulted in a 4.69% post-click conversion rate, which is more than 3x the industry average.

Do these case studies show you how effective geotargeting can be? Does your business need help with geotargeting?

12 authentic ways to receive better online reviews (Infographic) 0

Posted on October 28, 2018 by Rob Petersen

Better online reviews

Better online reviews are now a key consideration for every organization, brand, doctor, lawyer, contractor, caterer, hotelier, restaurant owner and human resource department. And for good reason:

The facts show better online review influence our buying decisions and impact revenue for every kind of business. But any business is not above getting a negative review and figuring out how to deal with it. Some even resort to writing their own positive reviews. Do they work? Hardly.

How does a business get better online review authentically? Jessica Leone, an unapologetic word nerd, bookworm and Florida Gators football fan, let us know in an infographic she created, How to Get More Positive Reviews (and Deal with the Negative).

Here is a brief summary how to get more positive reviews and deal with the negative.

  1. HAVE A CLEAR CALL-TO-ACTION ON YOUR SITE: Make it easy for people to see and go to where they can write a review.
  2. SAY THANK YOU: A simple thank you page to customers with a request they leave a review goes a long way.
  3. SEND A PERSONALIZE TEXT OR EMAIL: Ask if they will leave a review when your business and their experiences are still fresh.
  4. SOCIAL MEDIA IS YOUR FRIEND: Use a display plug-in to share social media reviews.
  5. FACE-TO-FACE: Asking in person for a review is 7X more effective than asking by email.
  6. TALK TO VENDORS: For B2B industries, ask vendors and suppliers. 7 out of 10 people will leave a review if they are asked.
  7. CONSIDER AN INCENTIVE: Zappos Rewards Program gives members 100 points toward products for leaving a review.
  8. TIMING IS EVERYTHING: Ask consumers to leave a review when they are likely to be at their happiest. American Express found a happy customer will tell 9 other people about their experience.
  9. SEND A FOLLOW UP: 20% to 25% of Esty purchases result in a review because they send a follow up email or text.
  10. ALWAYS RESPOND: Whether positive or negative, respond to reviews. Harvard Business Review found hotels that respond receive 12% more reviews and their ratings increase.
  11. REACH OUT TO A NEGATIVE REVIEWER DIRECTLY: 78% of consumers who receive a response believe the business cares about them.
  12. SPREAD POSITIVE REVIEWS: Share and promote reviews on your website and social networks.

Here is the infographic.

Better Online Reviews Infographic

Are these ways useful to you to get better online reviews?

9 artificial intelligence case studies show companies the money 0

Posted on October 14, 2018 by Rob Petersen

artificial intelligence case studies

Artificial intelligence case studies demonstrate the many ways companies are using AI to increase sales, productivity, speed, efficiency, segmentation, targeting, compliance, conversions, create new products and, of course, generate significant business growth.

Artificial intelligence is the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.

These artificial intelligence case studies show AI’s breadth, innovation and business return.

Here are 9 artificial intelligence case studies that show companies the money.

  1. ALIBABA GROUP: Is a Chinese multinational conglomerate specializing in e-commerce, retail, Internet, AI and technology. Among companies is our artificial intelligence case studies, Alibaba uses AI to help map the most efficient delivery routes. Works quite well! And Alibaba claims that smart logistics have resulted in a 10% reduction in vehicle use and a 30% reduction in travel distances.
  2. AMAZON: Alexa is one of Amazon’s most popular and most famous AI product. It helps drive the algorithms that are essential to Amazon’s targeted marketing strategy. AI allows Amazon to predict what products will be the most demanded to provide customized recommendations based on customer searches. And according to rejoiner, Amazon’s recommendation engine drives 35 percent of total sales.
  3. COCA-COLA: Coca-Cola Amatil is the largest bottler and distributor of non-alcoholic, bottled beverages in the Asia Pacific. Coca-Cola Amatil was relying on limited and manual measurements of products in store, as well as delayed data sourced from phone conversations. Coca-Cola Amatil sales reps used Trax Retail Execution image-based technology to take pictures of stores shelves with their mobile devices; these images were sent to the Trax Cloud and analyzed, returning actionable reports within minutes to sales reps and providing more detailed online assessments to management. Coca-Cola Amatil gained 1.3% market share in the Asia Pacific region within five months.
  4. COGNIZANT: Is a multinational corporation that provides IT services. Cognizant Digital Business has developed an AI-driven machine learning solution for the compliance function at a leading healthcare services provider that parses doctors’ notes entered into the organization’s electronic medical records (EMR) to identify potential drug-seeking behavior. Opioid dependency is devastating for patients and their families. In our artificial intelligence case studies, Cognizant’s system uses text analytics and an advanced machine-learning algorithm to mine physicians’ notes and electronic medical records. alerts doctors during patients’ visits when a pattern of at-risk behavior is identified. So far, 85,000 at risk patients have been identified through this system with savings to organizations of $60 million.
  5. GLOBAL TECH LED: Is a LED lighting design and supplier to U.S. and international markets, specializing in LED retrofit kits and fixtures for commercial spaces. The company used Google Analytics’ Smart Lists in our artificial intelligence case studies to automatically identify Global Tech LED prospects who were “most likely to engage” and to remarket to those users with more targeted product pages. They used Google’s Conversion Optimizer to automatically adjust potential customer bids for increased conversions. Remarketing campaigns triggered by Smart Lists drove 5 times more clicks than all other display campaigns. Traffic to the company’s website grew by more than 100%, and was able to re-engage users in markets in which it was trying to make a dent, including South Asia, Latin America, and Western Europe.
  6. JD.COM: Beijing-based JD.com partnered up with Siasun Robot & Automation Co Ltd. to use automation technology, such as robots, to improve warehouse operations. The key idea was to improve the speed and efficiency of product sorting and delivery in warehouses, cutting down the costs and increasing revenue.   According to Techemergence, after implementing this new initiative, a number of online orders reached 1.26 billion in 2015 (double the amount of orders in 2014) and approximately 85% of those orders were delivered within two days. Unfortunately, JD.com aims to use Artificial intelligence to reduce the number of employees from approximately 120,000 to 80,000 over a decade to increase efficiency, by reducing manual work and therefore increasing profit margin.
  7. PETER GLENN: has provided outdoor apparel and gear to individual and wholesale customers for over 50 years, with brick-and-mortar locations along the east coast, Alaska, and South Beach. Peter Glenn used AgilOne Analytics for advanced segmentation abilities included data on customer household, their value segment, and proximity to any brick-and-mortar locations. Peter Glenn saw a 30% increase in Average Order Value (AOV) as a result of its automated marketing campaigns.
  8. RAKUTEN: Japan’s largest e-commerce site, Rakuten, continues to invest in AI to better predict customer behaviors as it is critical to the e-commerce success. Right now, with their Rakuten Institute of Technology, they are able to analyze their 200 million products to forecast sales with a high degree of accuracy. Now they are also capable of segmenting buyers more accurately using real-time data.
  9. UNDER ARMOUR: An American manufacturer of sports footwear and apparel,  built a UA Record™ app was built using the IBM Watson Cognitive Computing platform. The “Cognitive Coaching System” was designed to serve as a personal health assistant by providing users with real-time, data-based coaching based on sensor and manually input data for sleep, fitness, activity and nutrition. The app has a rating of 4.5 stars and grew revenue for Connected Fitness accessories by 51% to $80 million.

Do these artificial intelligence show you the money? Are you ready to see how AI can be used at your company?

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