Make Sure Your Marketing Measures Up

One of the biggest challenges for businesses is to understand what marketing activities work and what doesn’t work and where they should concentrate their efforts to get the most out of their limited marketing budget. 

With the massive growth in online marketing channels, there is now a vast amount of data available that will tell you virtually anything you need to know, from how many ‘likes’ you’ve got to how many people with white hair opened your email or visited your website. That’s just the tip of the iceberg and if you were to try to keep track of all these stats, you’d soon be completely overwhelmed. Some of these measures are very useful indicators of how effective certain tactics are but none of them really tell you what matters: Did my marketing generate sales and how much money did I make? 

There are a small handful of key measures that will tell you if your marketing is working, and from these you will be able to identify what you should do more of and what you should drop. The first step is to make sure you keep a record of how much you are spending and what on: 

• Marketing Spend
• Advertising (split by press / social / google etc)
• Material / literature
• Agency costs (split by video, images, design, media buying etc)
• Events / hospitality
• Mailings / email
• Website changes
• Merchandise
• Manpower costs

The trick is to capture this information for a defined timeframe or campaign so you can then associate it with sales generated.

Using this information and the profit margin on your products or services being promoted, you will immediately be able to work out the total amount of sales needed to break-even – [break-even target sales = spend / margin]. This is useful and it will help you to decide if the spend needs to be adjusted before you commit to it.

With just this information and the sales generated (making sure you only connect sales from this activity), you can easily work out the two most important marketing performance measures: 

• Total profit on your activity [profit = (sales x margin) - spend] 
• Total return on your marketing investment (ROI) [ROI = profit / spend] 

If you get into the habit of doing this on all of your marketing activities, and recording results in a summary report, you will soon start to identify the campaigns, activities, tactics and targeted customer groups that generate the best sales and the best return. By analysing the best and worst performing campaigns, you will quickly spot the specific tactics you should do more of and the ones that should be improved or dropped. At the same time, you will start to understand which customer groups are most responsive and most valuable to your business.