Yellow Pages Roi Formula

1. Incoming calls. The number of incoming telephone calls it takes to produce an order.

2. Actual profit. The average gross profit per average Yellow Pages order.

3. YP cost. The cost of your Yellow Pages.

4. Expected profit. Percentage of expected profit from your ad.2

1. Incoming Calls

First, estimate what percentage of your Yellow Pages calls you can reasonably expect to sell. Unless you are in the pizza or other take-out business, most advertisers tend to overestimate their success. Some will be from customers checking on an order. Some will be from people trying to sell you something and are using Yellow Pages as a search for business. For now, assume you will sell one out of five, so it will take you five calls to get one sale.

2. Average Sale

Next you need to know your average invoice. Most advertisers use their most frequent sale amount and call that their average. To find a true average, take your last month's invoices, add them, and divide the total by the number of invoices. That will give you a true average sale.

Take the average sale and estimate its tangible costs, including commissions to salespeople (if any) and other labor costs. Do not, however, include "special overhead." Thus, if you are a florist, your stylist gets paid whether she works on the average order or not, and your restaurant pays its pastry chef, even if everyone orders ice cream. Use only what it costs you to create an additional average order. When you deduct those costs from your average sale, you will have its gross profit. (Using the gross profit figure will be explained in the next section.)

3. Yellow Pages Cost

The monthly cost of the ad you are considering.

4. Determining Your Yellow Pages Advertising Expected Profit

Be reasonable about the percentage of profit you expect from your Yellow Pages ads. Surely you don't expect a 100 percent return on your other expenditures. So

1An investment, not an expense.

2These four steps make up the formula used by Davis in his consulting work.

what is wrong with a 20 percent or 25 percent return on your Yellow Pages? Consider this example.

Continue reading here: Notes On The Broadcast Fax Checklist

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