What are the pitfalls of ROMI

[moniya12]

ROMI is a useful metric, but it should not be relied upon alone when assessing the effectiveness of marketing activities. This is because it is not always possible to trace a clear connection between the achieved result and the specific actions of marketers. It is necessary to consider factors that can affect the results of ROMI calculation and assessment.

The sales cycle is too long
In some market segments, the sales cycle can stretch over several months. This phenomenon is especially common when selling expensive goods and services, such as real estate, cars, specialized equipment, exclusive goods. It is not uncommon for a client to view an advertisement in March and close a deal in September. In such cases, calculating the return on marketing investment (ROMI) for one month does not make sense. In order for the result to reflect the real algeria consumer email list​ picture, it is necessary to take data for the entire decision-making period.

You can calculate profit based on the average checks
Applying different pricing structures to the same product can distort the ROMI. For example, one customer may purchase the product at full price, while another may pay less due to a loyalty discount. In this case, it is advisable to establish averages based on empirical data and monitor any deviations.

The stability of sales figures is a key indicator of a company's financial performance.
The company's profit is primarily affected not by advertising, but by sales. For example, the most effective sales manager was on vacation, which resulted in a decrease in conversion to orders and payments, which subsequently led to a decrease in the return on marketing investment (ROMI). Conversely, this change is not related to advertising, since the number of potential customers remains unchanged.

Some companies, seeking to achieve favorable financial results, resort to the services of agencies that guarantee an increase in the return on marketing investment (ROMI). In order to achieve the promised indicators, the contractor stops advertising low-profit products. As a result, ROMI increases, but this has a detrimental effect on the business, since some products stop selling, and real profits decrease.

[yadaysrdone]

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