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Posted in: marketing advertising.
Tagged: advertising · brand · breakeven · customer · Equity · Measure · offer · point · Versus · What's
It depends completely on how many new customers an advertisement brings in, and what your needed gross profit per person is compared to the gross profit per person delivered by your offer.
If you’re going to properly measure the effectiveness of an advertisement, or tougher yet, project how effective an advertisement will be, you’ll need to have some good reporting practices in place to measure your business now. Essentially, you have to have the information to know where you’re starting from to predict how you’re going to get somewhere.
Effective reporting can be done with everyday programs such as Microsoft Excel or Access. To create effective reports, point of sale software is not necessary, but it does help. Here are the reports you should have:
On a daily basis, the following reports should be produced and distributed to the designated person(s):
•Sales Reports by Item
•Profit & Loss Report – Period to date
Key numbers produced: Sales per labor hour, Sales per labor dollar, Ideal cost of goods sold, Gross profit per item, Sales per customer, Gross profit per customer, Actual daily usage of key inventory items, Ideal daily usage of key inventory items, P&L figures compared to budget
On a per period/month and yearly basis, the following reports should be produced and distributed to the designated person(s):
•Profit & Loss Report – Period
•Profit & Loss Report – Year to date
Key numbers produced: Sales totals by category, cost of goods totals by category, expenses/COGs by percentage of sales, all P&L figures compared to budgets for week, period, year
If you have the proper tools for creating these reports and producing your actual gross profit per person, it is much easier to measure the effectiveness, or potential effectiveness of advertising and marketing by simply estimating the costs of the marketing into your budget worksheet, then using blank customer count and sales by item reports (which should contain the item costs also) to estimate sales and view the effects of the costs/sales on your average gross profit per person, and your overall profit and loss.
If you don’t have a proper reporting system set up, contact me, I’d be glad to assist you.
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