Many new business owners and investors believe that profits depends on the price of the product, and the number that are sold. Whether the product is a house, a course, an investment product, or an ebook, profit and loss is dependent on more than the price of the product and the number that you sell.

Return On Investment, the ROI, refers to the amount of profit you earn on every dollar spent. Two businesses may sell product A for $100 each. Company A may have an ROI of $40. Company B has an ROI of $20.

Both of these companies sell the same product, for the same price, but company A is better organized, has fewer expenses, and sells more products for the same cost.

A low ROI can be the result of poor office management, or a poor sale's record. There are several different factors that may lower the ROI. But, in short, the ROI is based on the number of sales you can generate on your yearly operating budget.

The more sales you generate, the higher your ROI.

There are several ways to increase your ROI. The first is to take a close look at the cost of operating your business. Many businesses operate under a lot of waste. They hire a full time secretary when outsourcing would be sufficient.

The second method is to tighten up the company's sale's network. This may involve spending money on research. It may require and investment in time to learn what your consumers want, need, and what problems draw them to your product or service.

Two-Way Marketing

Most companies that have a low ROI also lack a two-way marketing plan. They may do market research, or run some surveys, but they also lack of two way communication between the company and the consumer.

Many high-profile companies believe that courses, convention weekends, and marketing surveys are good substitutes for two-way communication between the company and the consumer.

Unfortunately, all of these types of marketing are one way. They keep the company in control of the information control. The consumer has only two choices. They may respond to the company representative or agent, or they may remain quiet.

Two-way marketing allows customers the opportunity to voice their opinions, concerns, and write their own content. Then the company collects the information and uses it for marketing, even if it contradicts their current target marketing efforts.

Television companies do this. They consider that 1 response to a program is worth 1000 responses. So, a company that has 10 responses that suggest a new problem, or concern, can represent another 9000 or 90 000 people who did not take the time to respond.

This type of marketing is not an inconvenience to overlook. It is a powerful marketing tool that can be used to find secondary markets or products that might increase your ROI.

For example, let's say that you sell a ‘how to start a business course.' However, your course package offers a mentorship program that includes 1 hour a month with a certified Success coach. This not only sells a business to consumers, but it sells problem solving.

Increasing ROI will also increase the profit. There are a thousand methods of increasing an ROI. The easiest to understand, and cheapest, is to build two-way marketing between the consumer and the company.