Marketing Return on Investment (MROI)

In the lesson “Finance for Marketers”, you have been introduced to the Marketing Return on Investment (MROI) concept. Now, it is time to practice the discussed concept through a simple example.

Setting

A farm equipment company was considering an email campaign to remind customers to have tractors serviced before spring planting. The campaign is expected to cost €1,000 and to increase revenues from €45,000 to €50,000. Baseline revenues for tractor servicing (with no marketing) were estimated at €25,000. The email campaign was in addition to the regular advertising and other marketing activities costing €6,000. The firm uses contribution to assess financial value and the contribution on tractor servicing revenues (after parts and labor) averages 60%. 

Please note: Each of the metrics discussed in the lesson can be calculated from the information provided in the description above.

Accounting for contribution

• The financial value with the marketing and email campaign equals the revenues (y2 = €50,000) multiplied by the contribution margin (60%).
• The financial value with all the marketing except the email campaign equals the revenues (y1 = €45,000) multiplied by the contribution margin (60%).