For entrepreneurs and small business owners, every moment you spend doing something for your business is an investment. So it’s understandable that you want to make sure you’re getting a return on that investment. After all, your time is finite and valuable.

Following that logic, if doing A gives you a better return than doing B, you’d probably be smarter to skip B entirely and just focus on A, right? Maybe… but not necessarily.

It comes down to the difficulty in clearly and accurately calculating ROI for individual tactics. Or, more broadly, being able to parse the value of activities more related to brand awareness versus those associated with direct lead generation.

The Direct Approach: Find Leads and Convert Them 

If you’re looking for a straight line to calculate ROI, the direct approach is probably the closest thing that exists. While there are many different ways to be “direct,” in general this tactic involves reaching out to your audience with a specific offer and then seeing how many people convert or the amount of sales you get from the tactic.

For example, you could create a targeted Google Ad and analyze how many people click through and how much they end up spending. Other versions of this include compiling a list of potential leads, reaching out to them directly, and getting them to convert; or even going to a networking event or speaking in front of an audience and then talking one-on-one with people afterward.

In short, you invest your time in cultivating specific leads and determine return based on who converts. Fairly simple and straightforward.

(It’s a bit more complicated than this, but we’ll come back to that later.)

Getting to Know Me: The Power of Brand Recognition

Participating in brand awareness activities is seen by many as a less valuable way to spend your time. After all, you’re a business. You have a specific product or service to sell, and it does you little good if everyone recognizes your logo, but no one is actually buying.

That’s fair. You need money coming in the door, and it can be hard to calculate how effective brand awareness tactics are in making that happen. If you go on a podcast, give a talk, or even publish a book about your line of work, it’s difficult to tell if any of those individual things are what ultimately led someone to convert and become a paying customer unless they tell you directly. In other words, it’s hard to accurately calculate their ROI.

But brand recognition does matter. We know from decades of research and anecdotal evidence that things like name recognition and staying top-of-mind matter not only for eventual conversion, but also for things like additional sales, word-of-mouth, and brand loyalty.

Want an example? Think about the yard signs people put out for political elections. You might wonder if there’s really a point to them. After all, are you going to vote for candidate A just because a bunch of your neighbors have signs supporting them?

Yes and no. Generally speaking, for big elections where both candidates are well known, lawn signs make little difference. However, in 2016, a study compiling the results of four randomized field experiments found that lawn signs increase vote share by 1.7 percentage points. That may not sound like much, but it can matter a lot when there’s tight competition between lesser known candidates (or in your case, businesses).

Even more compelling – back in 2011 a Vanderbilt professor co-authored a study where the researchers made up a fictitious candidate for a local election and created signs for him. Against five other real candidates, the fake one was listed in the top three choices by 25 percent of people. And there’s even more to it than that. Some people had the fake candidate’s name subliminally flashed in front of them, and they were found to be more likely to support him than those who didn’t have the name flashed. Crazy, but true.

The point is, quite a few people chose someone solely based on the fact that they recognized the name. Your takeaway? Putting yourself and your business out there in front of people matters when you are asking them to choose you.

How Does This Apply to ROI and Where You Want to Spend Your Time?

There are a couple of things to keep in mind here:

Often, it takes 6-8 touchpoints before someone is ready to convert. Do even the tiniest bit of research and you’ll find plenty of marketing experts saying this exact thing – or suggesting that even more touchpoints are necessary. 

Because of this, even though it seems like a straight line to call a hot lead directly and get them to convert over the phone, their path to conversion may be quite a bit windier in reality. Maybe they first saw your billboard, stumbled onto your website, or ran across an interview you gave to a blogger they trust. In many scenarios, there can be recognition when you start talking to them, which can statistically increase your chances of conversion. 

Anywhere from 20-80% of people may not need what you’re selling right now. As you can see from those numbers, this can vary widely. It depends on the industry you’re in, who you’re targeting, overall market conditions, and so on. What it means, though, is that chasing after everyone directly to get them to convert immediately is probably a waste of your time – and may even annoy potential leads so that they ultimately choose someone else. 

However, if you combine those two ideas, you can see that one great way to nurture leads and prime people for conversion when they’re ready is to engage in brand awareness activities. This way, you’re continually selling the idea that you are the go-to expert for this type of product or service and staying top-of-mind for your audience. If you manage to do this well, who do you think they’ll reach out to when they finally decide to pull the trigger and become a paying customer?

What all of this means for you has to be determined on a case-by-case basis and borne out by using analytics to see what’s working – and what isn’t – over time. Then you refine your strategy based on those results, continuing to make it better. Ready to start defining your strategy to maximize your ROI? Set up a free consultation with us today.