It Pays to Evaluate the Total Cost of Ownership in Your Signage Program

Return on investment, or ROI, is a term often used to evaluate financial decisions. In a world where the pressure is on to increase productivity while conserving resources, retailers are under the gun more than ever to apply the concept of ROI in all aspects of their jobs.

Evaluating the return on expenditures for in-store marketing programs is one of those areas that must stand up to this scrutiny – and of course, the cost of signage factors into this equation.

At first blush, visual display managers looking to achieve the highest ROI might be inclined to look at printing costs and the price of signware as key purchase criteria for a given project. After all, if these costs are lower, then the ROI increases – doesn’t it?

On closer examination, however, these up-front costs are just two of many benchmarks that figure into the real cost of ownership of a signage program. In fact, looking only at these costs can be quite misleading. In evaluating the real cost of your signage system – and really any purchase – it pays to look for the hidden costs, just as the following story illustrates.

Looking at a recent Sunday paper, I found myself browsing through the travel section and, in particular, the ads for cruises. The ads were enticing, particularly given some of the promotional rates being offered. The ads all shouted low prices, and just as I started to think, “Wow, that’s cheap!” I remembered the hidden extra charges that add up to make this “bargain” still a large out of pocket expense. There are port charges, taxes, airfare, transfers to and from the ship, hotels pre- and post-cruise (if air travel doesn’t sync well with departure and arrival), land excursions, alcohol, souvenirs, cruise pictures, and, while not mandatory, well deserved tips for staff.

These “hidden” charges aren’t unique to travel. They exist in virtually all of our business decisions, too. We may not recognize them as easily as those in the example above, but they exist. Take new employees. The cost of new staff goes well beyond wages or salaries. There are health benefits, payroll taxes, workers compensation, bonus dollars or profit sharing, employee gifts, meals, perks, car (if applicable), office supplies, telephone, corporate apparel, etc. When you add all this together, the true cost of a new employee is likely 50% greater than their hourly wage or salary.

The same principle applies to signage. If you’re calculating your cost simply by adding what you pay for graphics and the hardware to hang them, you’re missing a myriad of important hidden expenditures that impact your ROI. Here are just a few to consider.

Let’s start with compliance at store level. Great marketing and promotional ideas can boost sales – but not if the graphics program sits in a box because it’s complicated or can’t be installed because pieces are missing or broken. No matter how attractive, compelling or well-designed the program is, it can’t do its intended job if it hasn’t been displayed. Even delayed implementation results in lost opportunity cost. Well-designed signware should be simple to install by anyone in the store. It needs to allow for quick and simple graphics changes, and its design should make things like hanging straightness automatic.

So, what about installation? Is the signage program quick, easy and intuitive to put up, or does it require several steps and intricate assembly? Is finishing required? Does it come with clear and easy to follow instructions that are customized for each location?

“Accessibility” is the word we use to describe the user-friendliness of a signage system, and of course, it works on many levels beyond design. How helpful is your signware vendor’s staff if there are questions? Is there a toll-free number for store personnel to call with questions or to troubleshoot? The reality is that corporate marketing or visual display managers have to rely on store personnel to install the new program properly and in a timely manner, so accessibility of your system can dramatically impact your compliance rate at store level – and with it, your ROI.

Another factor is the cost of shipping. If you’re late in your planning, or your vendor can only make your in-store date via next day shipping charges, how accurate is your program cost now? Can you take advantage of drop shipments to avoid central distribution/warehousing costs? If not, shouldn’t you add that charge to the cost of your program? Even if you use drop shipments, you need to add the freight or courier charges to land the products at store sites. Another way to reduce shipping costs is to reduce weight. Can your existing signware system allow you to print new graphics on a thinner substrate – and still do the job holding them securely in place?

Then there is the cost of replacement parts due to fatigue or, sad to say, abuse. Shouldn’t your initial purchase decision factor in the reliability and life of the product? Shouldn’t you expect a reasonable lifespan for your system? Does the vendor warranty the product or price replacements at the same rate as the initial purchase?

How about manpower costs? Do you ever factor in the labor cost for the time it takes to change the graphics? How easy is it for in-store personnel to use the product? As we’ve noted above, not all signage products offer the same ease of use, and those with a higher degree of difficulty require more staff time to handle. What if field personnel or installers have questions? Unless the vendor offers to field questions for you directly, shouldn’t your true cost reflect the time you estimate you’ll need to spend post-purchase dealing with these issues?
It’s easy to compare the costs for printing and hardware for your signage program and make your decision on these factors alone. It’s much harder to factor in the “hidden costs” noted above and calculate the total cost of the program. However, it’s worth the relatively small investment in time to think through the program completely from design to implementation and then post-execution. If you consider these variables in your early planning, you may find that what appeared to be a more expensive sign or hardware configuration is actually the best investment you can make.

When you purchase higher-quality products and work with trusted, value-added vendors, these costs often disappear. Or, at minimum, if you address them upfront, they’re visible, not hidden, and you can build them into the initial budget. By planning for these expenses in the beginning, you save yourself aggravation and avoid surprises later, when it may be too late to do much about it except overspend the budget to complete the project correctly.