Last week, I talked about how to determine return on investment (ROI) for small business marketing activities. That’s somewhat easy when you’re looking at money you’ve spent vs. money that’s come in. But how do you determine the ROI of your time?
One of the most recommended marketing strategies over the last two to three years has been the use of social media and networking. This is a broad term that can include everything from blogging to creating a video for You Tube to tweeting on a regular basis. These activities can be real time eaters, particularly if you find it difficult to write or create stellar sound bites.
It also can be difficult to count the sales that actually come from these activities. If you ask most people where they’ve heard of you, you’re most likely get a vague answer of “the Internet,” if they found you through any of the social media channels.
Let’s assume that you are getting a substantial number of sales from the Internet. You have a sales page on your web site that converts your leads to sales. And, let’s say, that 10% of the people who visit your website (unique visitors) purchase a $25 item from you each month. You’re getting 1000 hits a month. So you’re earning $2,500 a month from your web site.
Once you’ve built your web site, your costs should be negligible. If you can increase the number of people showing up at your website, you should be able to increase your sales.
The next thing you’ll need to do is assign an hourly wage to your efforts. Let’s say $50 an hour is the minimum wage you want to pay yourself for your time. Spend two hours a week on social media, and you’ve spent about $400 per month.
You’ll need to make 16 more sales a month to break even. Remember, breaking even isn’t good enough. You’re really looking to get close to more than 100 sales a month to make the effort worth your investment.
Social media is a long term strategy. You’ll have to invest several months of time up front before you receive the results you want. Through a use of Google Analytics, analysis and careful record-keeping, you’ll be able to get an idea if your time investment is worth it!
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