It is pretty obvious that everyone is in business to make money. Well, in order to make money you need customers to buy your products and services. According to studies shown to us by the International Sign Association, signs can help your business do this by advertising, increasing profits, and decreasing expenses.
One sign manufacturer was curious as to whether signs were actually bringing in customers to his clients. He performed a study with his businesses that were less than 1 year old who conducted surveys 30-45 days after their signs were installed. They asked thousands of shoppers how the shoppers heard about them, and here are their responses:
Table 1: How did you learn about us?
|Number of Customer Responses|
|On-Premise Sign||Word of Mouth||Newspaper||Yellow Pages||TV||Radio|
|Percentage by Category|
The signs of these startup businesses attracted half of their new customers! Their signs brought in customers that the rest of their advertising methods would have never brought in, even their word-of-mouth referrals! Even after your business is more established and no longer a startup, your signage is still just as important. Studies have shown that on any day, as many as 35% of your stores passerby’s have never seen it before. These could become your first-time customers! Also, you want to always remind your regulars that you are there just in case another store is on their mind.
The University of San Diego was curious of the economic value of on-premise signs. They conducted a study of the increase of sales revenues resulting from sign improvements. Here are their results:
TABLE 2 – Average Increase in Sales Revenue
|Signage Change||Fast Food||Pier One Imports|
|Add one monument sign||9.3%|
|Add large pole sign (144 sq. ft.)||15.6%||8.6%|
|Add chain identity to plaza identity sign||7.7%|
|Addition of two new directional signs||8.9%|
|Replaced storefront wall sign with larger sign||7.7%|
The minimum sales increase shown is 7.7%. That doesn’t seem like much, but just a simple 7% sales increase can bump your profits up by $30,547. Imagine what your store can do with all of that money! Here is the proof..
Let’s say these are your annual sales and your after-tax profit:
|Your annual sales:||$1,757,486|
|Cost of goods sold:||61.8%|
|Gross Profit Margin:||38.2%|
|Operating expenses (includes other expenses of 1.5%):||36%|
|Income taxes (estimated at 35%):||0.8%|
|Income after taxes:||1.4%|
|After tax profit ($1,757,486 x 1.4% or):||$24,604|
Let’s now say that you added a sign to your property, causing a 7% sale’s increase like the businesses shown in table 2:
|New sales at 7% ($1,757,486 x .07):||$123,024|
|Gross Profit from new sales ($123,024 x 38.2% Margin Contribution):||$46,995|
|Net Profit (Assumes 35% taxes):||$30,547|
|Total Profit (Original Profit $24,604 plus New Profit $30,547):||$55,151|
Without increasing your businesses operating expenses, that is a leap from $24,604 to $55,151! That is just another example of why signs really do matter.
Another survey conducted by a Los Angeles auto dealership was done before and after installing signage to determine how effective signage really is. The LA car dealership picked a location where three other car dealerships had failed at in the past. The new owner invested $7,400 in replacing the signage, including one wall and one double-faced pole sign. His survey results were that the new signage was responsible for a minimum of 10 new walk-in customers per week! This means he received at least 6 additional sales per week. It took the new owner less than a month for the new signs to pay for themselves. He was also able to decrease his advertising budget from $16,000 to $4,000 per month….that’s an annual savings of $144,000!