return on investment or simply roi is the calculation of the profit earned on investment. the formula to calculate roi is as follows −

to understand the roi from mobile marketing, let’s assume −

• customer lifetime value (clv)

  clv = avg. revenue per customer × avg. no. of visits

  say, $100 per customer × 10 visits = $1,000

• calculate allowable cost of customer acquisition (coca) as −

  coca = clv × (% allocated to new customer)

  say, $1000 × 10% = $100

now, reallocate your mobile marketing budget by dividing them into ‘branding’ and ‘direct response’. for example, allocate 20% of your budget to direct response −

say, direct response budget = $200,000

20% of $200,000 = $40,000

hence, mobile marketing budget is $40,000.

now, calculate the number of estimated customers from new mobile marketing campaign.

clv= $1,000

budget= $200,000

coca= $100

customers acquisition = budget ÷ coca

hence, $200,000 ÷ 100 = 2,000

therefore, new customers = 2,000

direct response (of new customers) = 2,000

mobile marketing new customers = 400

conclusion − on 20% investment, you will gain 20% new customers.