Promotional products can be a highly effective marketing tool if used strategically. However, like any marketing investment, you'll want to calculate the return on investment (ROI) to ensure the spend is justified. In this article, I'll explain what ROI is, the benefits of promotional products, and provide a step-by-step guide to calculating ROI for your own promotional product campaigns.
What is ROI?
ROI stands for "return on investment". It is a metric used to determine how much profit or value is generated from an investment. ROI is expressed as a percentage or ratio and calculated using this formula:
(Gain from Investment - Cost of Investment) / Cost of Investment
For promotional products, the "gain" would be the revenue or sales generated as a result of the promotional items. The "cost" is what you spent on having the items produced and distributed. Higher ROI percentages indicate greater value returned from your investment into the promotional products.
Why Use Promotional Products
Promotional products are physical items branded with your company name, logo or messaging given to customers and prospects. Common examples include t-shirts, pens, notebooks, drinkware and tech accessories. The benefits of using promotional products in your marketing include:
- Brand Awareness - Useful branded items kept in constant view build familiarity.
- Lead Generation - People use and share promotional items, expanding brand exposure.
- Customer Loyalty - Customers appreciate receiving something functional for free.
- Cost Effectiveness - Physical items often achieve better ROI than other media.
- Versatility - Almost any item can be branded to fit objectives and budgets.
How to Calculate Promotional Product ROI
Follow these seven steps to accurately work out the ROI your business achieves from promotional marketing products:
Establish Campaign Goals and Metrics
Start by defining what you want to achieve from distributing promotional merchandise. Common goals include:
- Increase website traffic by _%
- Grow social media followers by _%
- Boost customer sign-ups by _%
- Improve brand awareness by _%
The metrics will depend on what you want to accomplish. Website sessions, conversion rates and sales revenue are some typical examples.
Track Baseline Metrics
Before you launch a promotional product campaign, record baseline metrics over a set period - for example, an average monthly website visitor count. Comparing post-campaign numbers will show the uplift generated.
Select Your Promotional Items
Choose cost-effective products aligned with your goals, brand and audience. Think about useful items people will keep, like power banks and drink bottles. Retail pricing information makes ROI calculations simpler later.
Distribute Your Branded Merchandise
Get your branded promo items in front of your target audience. This might be at trade shows, company events, outreach campaigns, hospitality suites and more. Record the quantity of items distributed for your ROI calculation.
Monitor Results and Record Post-Campaign Metrics
Once you've distributed the products, closely monitor your key metrics for a defined period to assess campaign impact. For example, calculate the average monthly web sessions post-campaign.
Calculate Your Key Metric Lift
Compare your baseline metric (e.g. average website sessions pre-campaign) to the post-campaign average. The percentage increase is the campaign lift generated from your promotional item distribution.
Work Out Your ROI
With your metric lift percentage calculated, plug the numbers into the ROI formula:
ROI % = (Gain - Cost) / Cost x 100
If your website sessions lifted by 30% that's your gain. Cost is what you spent on the promotional products. From the calculation, you have your campaign ROI percentage.
Getting Strong ROI from Promotional Items
As you can see, calculating the all-important ROI metric for promotional products takes just 7 simple steps. Accurately working out your return on investment helps you sharpen your approach and boost results over time. Additional tips for strong ROI from promotional items include:
Setting specific marketing goals to tie to:
-
Choosing branded merchandise recipients carefully
-
Tracking detailed metrics before, during and after campaigns
-
Evaluating the performance of different promotional products
-
Identifying and doubling down on what works best
The versatility, cost-effectiveness and visibility of branded promotional merchandise make this marketing channel extremely effective when ROI is accurately measured. Now you have an easy-to-follow approach to calculate your own ROI and continually refine your promotional product campaigns.