If you were investing in real estate you would evaluate your investment based on three approaches to value: the Market Approach, Cost Approach, and Income Approach. These three approaches would enable you to make not only an informed decision but a logical decision.
When investing in directories, the approach to value is different in it’s approach but similar in methodolgy. The common approach for many has been to determine how many clicks you would receive. Clicks are overrated. It is certainly one approach to value, but not the best approach.
Beyond Showing Up
The best approach to determining if you should invest in directories is to determine the answers to what is the strategy and what is the return on investment (ROI). Let’s look at both approaches when considering the investment in a directory:
Return on Investment (ROI)
How many sales do you need to break-even? If your investment is $1,000 for a directory and the likelihood is that it would generate a sale that exceeded your investment, it would be a worthy investment consideration. However if the gamble is uncertain to determine the number of sales you would need to meet or exceed your cost, beware.
Some directories lend themselves to benefits that are more difficult to measure. For example, certain affiliations that bring a sense of credibility. It could be non-profit associations that provide tax benefits to offset an investment as well as promote your cause. If this is the case you should ask yourself the following:
- Does this create more credibility to what I have to offer?
- Does the added credibility mean quicker buying decisions for my audience?
- Does it support my cause in a more meaningful way than without it?
After you’ve determined the ROI, the next step is to determine the strategy for making the ROI a reality. So what is the strategy behind the ‘click’ to your landing page/website?
Your strategy should accomplish the following:
- Allow you to leverage your association with the directory
- Build confidence of a buyer doing business with you
- An exchange of value; something I want to know about you in exchange for something of real value to you.
- Make it easy to do business with you.
These two approaches to investing in directories are paramount to making not just an informed decision, but the right decision.