Ultimate Guide to Custom T-shirt ROI for Small Businesses
March 19, 2019
For large and medium sized businesses, custom printed garments with company branding is a no-brainer. The cost of screen printed t-shirts or other branded apparel is a small percentage of a robust marketing budget, and businesses of this magnitude are expected to don branding in appropriate places. Companies in this category also probably participate in industry or trade conventions, ventures, and other business-to-business interactions where branded swag is commonplace. The return-on-investment (ROI) of branded swag is fairly easy to estimate in a closed system like an industry convention, where networking contacts made at the event can be tracked for future business opportunities and revenue increases.
But what about for small businesses? The decision to purchase custom-printed apparel isn’t as easy to justify when it comes to companies with more restrictive marketing budgets and fewer networking outlets. Determining the ROI of screen printed t-shirts with a local deli’s name and phone number, for example, isn’t as simple as putting the t-shirt recipients’ contact information into a database and tracking their sandwich purchases. To truly see the value of branded garments for small businesses, we need to dig a little deeper.
A Case Study
Let’s take the deli example a little further. Are we going to be selling the t-shirts, or giving them away? Will my employees be wearing the t-shirts? These are questions that need to be answered to determine what kinds of results our promotional t-shirts (and dollars) will be yielding. When it comes to small businesses, only you can determine the best answers for your situation. For our deli example, let’s decide to give t-shirts away to a handful of longstanding customers (15), and offer the t-shirts for purchase at cost (no markup). 10 employees will also be wearing the t-shirts. Let’s start with a hundred shirts at a typical price of $6/shirt. We ordered from Rush Order Tees, so shipping was free. Our intial investment that we won’t be getting back so far looks like:
(15 longstanding customers) * ($6) + (10 employees) * ($6) = $150
The remainder of the 75 t-shirts valued at $450 are to be sold at cost, so we can’t consider this to be a straight loss. Knowing the volume of your business and the dedication of your customers, you’ll have to estimate the selling rate as best you can. In our deli, we’ll assume that we’ll be selling 2 t-shirts a week. That leaves us out $450 for 37.5 weeks. Erring on the side of maximizing our estimated cost to ensure we cover it, we’ll calculate the cost of this as 10% interest earnings on $450 for an entire year — even though in real life our deli would be recouping that money linearly, we’re only out the money for 72% of a year, and our 10% interest rate on such a small principle is unrealistically optimistic. In our example, we’ll consider the cost of these t-shirts to our business to be $45.
The Total Cost
In dollars, the total cost to our deli has been $195 for the custom printed t-shirts. Now we can begin to look at the benefits. For the purposes of this illustration, we won’t include any return from the t-shirts we gave to our employees. Even though they’re looking sharp and it certainly adds to the deli’s brand experience, the t-shirts on employees aren’t pulling in any new customers and they probably aren’t making them any hungrier, depending on what we’ve chosen as our graphic choices. Qualitatively it probably adds to our appearance and customer retention, but we’re interested in returns on our $195 more directly if possible.
Let’s Talk Return
Impressions (number of people that see the custom t-shirt) is difficult to determine and has drastic variance depending on location, business type, customer profile, and many other factors. We’ll give it a shot with our deli, but we’ll be making some huge assumptions in coming up with our range. We’ll give it our best go — working with such a limited amount of information, most if not all of the numbers that will go into estimating our metrics will be a best estimate or a limit on what we would consider reasonable for that value. It will be up to you to determine what constraints you consider reasonable for your business and customers.
There are 90 potential t-shirts (75 plus the 15 we gave to longstanding customers) out there in the wild. The first estimate we’ll make is rate of wear. Let’s say that the 15 longstanding customers will wear the t-shirts more frequently than the other shirts, because they presumably have a more personal connection to our deli. For our illustration, let’s say these customers will wear the t-shirt once every three weeks. Rounding down, we’re at 17 times a year. For the remainder of the shirts, a more limited 6 times a year will be used for our estimate. We’ll assume retention rate (keeping the t-shirts) is 100% because they are in the hands of a longstanding customer or a customer who wanted it enough to pay a few dollars for the branded swag.
Location is Everything
Where is our fictitious deli located? The number of people who will see or interact with our potential t-shirt wearing customers will be almost completely dependent on this information. Imagine the difference in impressions per day of wear for a deli located in Manhattan, NY versus a deli located in a tourist destination in the off season. Consider the location of those customers who have the t-shirts and think about how many people they see. For our urban deli in a top 5 market, we’ll estimate that our customers are clearly seen at a good viewing distance by 150 people a day. We’ll stay on the conservative side in our estimate and use this limit to our advantage, projecting an estimate rounded down to a non-ideal situation.
Accounting for the frequency of wear for our customers, we come to a whopping 105,750 impressions in the first year of fully distributed custom printed t-shirts. This makes our cost per impression only $0.0018 from our $195 investment. In only one year! As time goes on, the benefit keeps paying for itself with no input required from the business. Impressions will continue to occur completely independent from your will. It’s locally targeted and potentially word-of-mouth with every impression.
The Results Are In
When we break it down, the arguments and cost effectiveness of custom printed t-shirts are compelling. We examined a modest order of 100 t-shirts for promoting a local deli. In only a year, we would accumulate over 100,000 impressions and would cost us only $195, accounting for selling some of the t-shirts at cost. It’s a powerful form of marketing and happens without further input from the small business owner. Small businesses not considering custom printed t-shirts for marketing purposes would be wise to reconsider.