Operational Advancement – RSBN

Time to put ROAS in the rearview mirror

admin — Tue, 06 Sep 2022 02:38:19 +0000

It’s no secret that Return On Ad Spend is one of the most overly-used metrics in digital advertising. It’s a great way to quickly evaluate the performance of your business, and it works well for all sizes of companies. However, there are plenty of issues with using ROAS as your core or only performance metric that matters. If growth is in your marketing plans, leaning on profitable or consistent ROAS could set you up for a fall.

One of my favorite examples of how ROAS can be misleading comes from Neil Patel, who points out that “a business with a 3x ROAS is in good shape if it is making $1m in revenue, but probably not if it makes $100m.”

The problem with this metric is that it’s an average. It doesn’t tell you how performance changes with scale and there’s no way for you to know whether a 3x return on ad spend means your business should be profitable or not based on their current revenue level.

ROAS is a great metric for identifying if your business is healthy, but it doesn't show how performance changes with scale.

You might be thinking “well I need some sort of metric that tells me how my company performs.” And you’re right, ROAS is a good snapshot of how things are performing right now. ROAS isn’t enough by itself. Why not? because it’s an average and averages don’t reflect nuances or changes in budget or business direction.

Other factors are going to impact your ROAS too – like how you measure it. A client of mine used to complain how their competitors were getting great ROAS from a platform that had a lot of attribution options. But they never wanted to move from a last click attribution window, or ask how their competitors measure ROAS. Everything changes based on the window you look through.

Simply put:

A high ROAS is an indication that you’re not pushing the business and a low ROAS is a sign that you’re either trying to grow or things are getting tough.

That’s it.

At this point it would be great for everyone in marketing to just admit that there’s no such thing as an ideal performance metric—it’s all relative and depends on a number of factors. What kind of growth stage the company is in, the nature of the product, the lifetime value (LTV or ARPU) of a customer etc., etc.. But here are some things to keep in mind when looking at performance metrics:

Instead of using an average, use a metric with more staying power

In place of ROAS, why not just break it down to the sum of its parts – we know the ad spend so we know what the revenue target is for the business. Take the average out and look at that rev target. (Clearly if your target is leads – focus on volume and CPA).

(math alert)

If you have a $5k spend and are expecting a 5x ROAS – make the performance KPI $25k

The question you ask then becomes – is revenue on pace, below or ahead? The answers then dictate the action you need to take.

Use trends to diagnose and troubleshoot

Trends of your performance metrics are going to tell you a lot more. How are they trending over time? Are you seeing any patterns that indicate success or failure?

To see these trends more clearly – be very clear on KPI’s for different activities and types of campaigns. If you’re bidding on Brand terms in Google (and you should) – know your average cost per acquisition. Benchmark the averages for each of your Google activities from shopping, display and remarketing and set those benchmarks for each.

Learn the range of benchmarks for your campaigns in your Meta ads platform. Set your expectations that your prospecting is going to be more expensive than your remarketing or retention efforts.

These benchmarks do require a healthy account structure to be consistent – that means negative keyword lists and exclusions on these campaigns.

The next time you need to evaluate the performance of your ad campaigns, factor in context.

Ad campaigns, no matter the platform, are going to be inconsistent day to day. WebSavvy recently did a deep analysis of a client’s Google Brand performance over a long period of time. We excluded any sales days and found that the median volume of clicks or revenue generated could fluctuate greatly. The reason for this? Simply put – there are people at the other end of those mobile devices and they don’t act the same way every day.

Your prospecting campaigns will be even more erratic – whether that’s non-brand or meta campaigns. But understanding the trends and what the KPI for these campaigns should be in relation to themselves will help you find out if there’s more opportunity there or if you’re hitting diminishing returns.

It's time to rethink our metrics and focus on more detail than an average provides.

Wrapping up – stop leaning on ROAS as a summary metric. Go in depth

Set your marketing target at an actual number like a revenue target. (or lead volume if that’s your business)
Set KPI’s that are appropriate for the activity – If you’re keen for growth –
focusing on customer acquisition costs
Know your benchmarks for each activity to help diagnose and troubleshoot

Need help?

WebSavvy specialises in helping small to medium sized businesses grow. If you’re looking for some direction about your digital strategy we’d love to help – reach out to us at hello@websavvy.com.au

About Trevor Henselwood

Trevor is the Head of Growth at WebSavvy, digital specialists based in Melbourne. Trevor has helped major Australian businesses grow including Showpo, Adore Beauty and the Sheet Society, and has been a keynote speaker at Digital Marketers Australia. He has a passion for great stories and creative strategy, helping brands develop messaging that connects with their audience.

On track for omni-channel success

admin — Thu, 11 Aug 2022 04:10:12 +0000

Modern retail businesses have broader channels to market than ever before, and more opportunities to reach consumers in every corner of the globe. While e-commerce presents unprecedented potential to Australian retailers, it is also more complex, and comes with a range of challenges.

The challenge of managing and stocking multiple channels

Omni-channel is the new normal for retail businesses, but multiple channels add a new level of complexity to managing sales and inventory. With stock in various locations including retail outlets, stock rooms, warehouses and distribution centres, it is difficult to makes sure the right stock is in the right place at the right time to meet customer demand.

If you don’t know where stock is, it can be difficult to complete sales, and without complete visibility across all your channels and locations, opportunities can be missed and ultimately customers may be left disappointed.

On top of that, re-ordering stock for your online store for example, when it is available in a retail outlet, is wasteful and costly.

How to get visibility of your stock across all channels

RAMP offers a complete RFID for Retail solution that works straight out-of-the-box and comes complete with RFID tags, RFID readers and Loca.fi retail software that has been specifically designed to work with RFID solutions.

Unlike traditional barcodes, RFID tags can be ‘read’ at a distance, meaning that waving an RFID reader around a room full of stock can produce very accurate results, very quickly. In fact, RFID Journal (open link in a new window) estimated that average inventory accuracy increases from 65% to 95% with RFID technology.

And the use of RFID technology for inventory tracking can extend right through the supply chain. With RFID tags embedded at the point of manufacture, and fixed RFID readers placed strategically at critical points along the supply chain, accurate and real-time stock counts can be made as products move from manufacture to warehouse to store to sale.

Completing the picture is specialised software as part of a complete RFID technology solution that delivers real-time information via dashboards to key stakeholders who can then make better, more informed business decisions with accurate data at their fingertips.

Online sales, retail sales, ship-from-store and in-store pick-up are all made easier when there is complete visibility in real-time for all inventory across all locations.

Knowing where inventory is in real-time allows you to move stock around to where it is needed (or will be needed soon) and is one of the major benefits of RFID technology for Australian retailers.

RFID ticks all the boxes for retail inventory management

Maximise sales – sell what you have, not what you don’t
Accurate and streamlined inventory management and sales across all channels
Save time and effort counting stock so staff can focus on sales
Provide an improved customer experience
Works for all kinds of retail product categories including apparel, eyewear, cosmetics,
beauty products and many more

How RFID makes retail better

Retail RFID solutions not only ensure that sales are maximised, but customers also have a better experience and staff time is saved. There are a range of business benefits that help make RFID a valuable investment for retailers of all sizes.

Faster stock movement: RFID helps streamline warehouse processes, removing stock-counting bottlenecks and human intervention.

Fewer ‘out-of-stock’ situations: Knowing where stock is at a moment in time, and in what quantities, helps anticipate inventory usage accurately. RFID can also be used to trigger auto-ordering as inventory moves out of warehouses and stock levels get low.

Less ‘safety stock’ needed: Accurate inventory counts means less need to have valuable working capital tied up holding buffer stock.

Reduced ‘shrinkage’: Slash shrinkage and stock loss by more than 50% to save replacement costs and the need for time-consuming audits.

Less errors across the supply chain: With RFID tags affixed to inventory items at the point of manufacture, errors can be reduced across the entire supply chain. A study by Auburn University found that 69 per cent of orders that used barcodes contained an error, but with RFID this was reduced to just 0.01 per cent.

Better reports, faster: RFID retail inventory management solutions improve real-time reporting accuracy for all stakeholders to make better business decisions.

RFID retail inventory solutions are proven to improve stock management to ensure the sales floor, or online retail store, are replenished for prompt stock turnover, ensuring increased customer satisfaction, reduced costs and improved revenue and margins.

RAMP RFID in action: delivering a stylish and effective solution for leading fashion retailer

Leading Australian high-end fashion retailer Tuchuzy chose RAMP to deliver the Loca.fi Retail RFID solution to provide real-time visibility of stock across retail and online stores, reduce reliance on manual stock takes and reduce shrinkage for their premium products.

Facing increasing online demand, stock shrinkage and regular business shut downs to conduct time-consuming manual stock takes across a range of designer fashion brands, Tuchuzy implemented the RAMP Retail RFID solution to improve efficiencies across the retail and online stores, reduce stock losses and increase product availability for customers.

The RAMP Loca.fi Retail RFID solution for Tuchuzy includes a combination of hardware and software to create an integrated and seamless retail inventory management system, fully integrated with the legacy Cin7 POS system.

RFID tags: Affixed to products on arrival from various suppliers (part of swing tag), the Gen 2 UHF EPC tags are compliant with GS1 standards.

Handheld RFID readers: can read entire racks of products with a Geiger search. Holding the reader up to 6 metres from inventory, it will locate and count your stock.

RFID printer: New generation thermal printer with advanced support for barcodes and RFID encoding.

Loca.fi software: Developed by RAMP, Loca.fi is easy to deploy and the foundation of an end-to-end RFID solution that seamlessly integrates with Tuchuzy Cin7 POS, inventory, and order management system.

Since implementing the RAMP Loca.fi Retail RFID solution, Tuchuzy has seen the following benefits:

Reduction of around 20% of working capital tied up in stock
Reduced shrinkage of high-value fashion items
Increase in customer satisfaction from 90% to over 99%
Reduced out-of-stock situations
Vastly reduced time for stock takes, that are now completed in under and hour (so can be undertaken far more regularly)
All stock takes and stock movement integrates in real-time with inventory and POS system
Improved stock visibility and management across retail and online environments
Estimated payback of system investment of 6-months, representing 200% ROI over first 12 months

“Having item level visibility of all inventory creates huge value for our business in terms of improved omnichannel fulfilment and customer satisfaction, helping reduce the potential for errors when fulfilling online orders and handling returns.”

Andrew Shub

Director. Tuchuzy

Making the implementation and adoption of the RFID solution simpler and faster for Tuchuzy was the easy integration with their existing Cin7 POS system. The new RFID solution worked out-of-the-box with the Cin7 system to provide an effective, holistic retail inventory management system that could be deployed quickly and provide immediate returns to the business.

Join the RFID retail inventory management revolution

RFID technology solutions are proven to keep track of valuable stock and inventory for omni-channel retailers. With greater accuracy and real-time information, businesses can better meet customer demand, increasing customer satisfaction and retention.

At the same time, costs are reduced, and staff can be redeployed from mundane and routine tasks to more productive, revenue-generating activities.

When you need to improve retail inventory management, speed up your supply chain and gain valuable, real-time insights to make better business decisions, you need to talk to RAMP, the trusted, leading RFID specialists in Australia with over 16 years of experience in delivering customised RFID solutions for retail, inventory and asset management.

The RAMP team is based in Australia and includes customer service, developers and product experts who can help quickly deploy an RFID solution for retailers of any size, in any category.

VISIT RAMP