Finding appropriate metrics by which to measure your business efforts can be complicated.
Digital signage strategies for example, can be very effective, but as a business owner it is important to be clear as to the tangible returns the strategy can bring to operations. In competitive economic environments, this is becoming increasingly important.
The application of a digital signage solution needs three plans for effectivity. The first plan is the implementation plan. This should be followed by the content creation plan, and finally the ROI measurement plan. And, as a digital signage solution can be costly, sometimes a very significant investment for businesses, ensuring you improve your sales with your investment is vital.
So, exactly how to we measure the ROI? It’s relatively simple, really: The gains from your investment, minus the initial cost of the investment. For example, if a digital signage project with an average of 10 screens costs $50,000, the ROI is positive if on average each screen results in more than $5000 worth of sales. However, measuring exactly how the digital signage results in sales is the key issue, and you have to have established indicators in place before you make a purchase.
With regard to tangible ROI, there are two primary financial areas to focus on—Sales and savings. Here’s what to look for:
Potential Sales Measurement Indicators
- Variation in the quality of products sold: Comparing products sold over time with and without digital signage.
- Variation of the value of transaction: Comparing average transaction value before and after digital signage adoption.
Potential Savings Measurement Indicators
- Evolution of advertising and communication costs: Consider the savings in advertising between digital signage and other methods over a prolonged time period.
- Evolution of operating costs: Is using digital signage to promote discounts based on stock levels improving your operating costs?
That said, some organizations have taken to using a different metric to measure the returns on their digital signage strategies, namely Return On Objectives, or ROO. Unlike ROI, which is specifically financially motivated, ROO is relates directly to the predetermined objectives your firm wants to achieve.
For example if you are looking to ensure that your digital signage creates more buyers in store, however you are not focused on the purchase amount, an indicator for that objective may be the number of people who make a purchase in one day divided by the number of people in the store in total in the same day.
Similarly, attracting new customers can be measured by daily percentage of customers in the store who are new compared to the number of people who see your digital signage solution.
Ultimately there are dozens of types of indicators—both qualitative and quantitative—you can use that can be very effective measurements of the success of your digital signage solutions. They allow you to profile your customer and give you an accurate breakdown of turnover.
The biggest thing to remember when calculating your ROI as an organization is to always use both positive and negative indicators. This will help you gain more accurate insight, and provide the proof you need to know that your digital signage investment was a good choice.
AVI Systems has partnered with numerous organizations ranging from health-care facilities to fortune 500 businesses. See our digital signage solutions in these case studies.