By Loraine Kasprzak, MBA
A retired executive who is starting up a new company recently asked me, how does a business owner know if they are getting a return on their marketing investment?
This results-oriented entrepreneur isn’t the only one asking how much advertising, social media, email campaigns, and direct mail will impact his bottom line. Businesses of all sizes – from Fortune 500s to the corner coffee shop – have begun paying more attention to measuring the performance of their marketing programs. They are realizing that analyzing the return on investment (ROI) for marketing can help them prioritize projects and invest their marketing budget more wisely.
- Choose the right metrics. A good question to start with is, “Is what I spend on marketing improving my revenue growth and market position?” Answering will give you insight into which performance measurements are most appropriate for your business. You might track, for example, dollars spent per sales leads generated, browser-to-buyer conversion rate, or change in average order size. You should also track revenue to expense ratios, or a similar measurement.
- Another tip: you’re better off tracking a few key metrics that you can act on, rather than getting bogged down in data.
- Not everything can be immediately measured. Building your brand, for example, isn’t always easily or inexpensively measured. The results from such efforts usually pay off over time as prospects become more aware of what your brand stands for, and are more willing to grant you a sales call or visit your store, website, blog or fan page.
- Build metrics into your marketing campaign. Branding aside, many marketing tactics do lend themselves to measurement if you plan ahead. A good rule of thumb here is that if you aren’t going to measure it, then don’t do it. For example, if you don’t plan to capture and track the leads that result from a LinkedIn or magazine ad that you want to run, then don’t run it. You’re wasting your money.
- Follow through. Communicate with your team so that they are aware of the performance measurements, and agree to a system for tracking relevant data. Let them know how much the campaign depends on their accurate tracking. And when the campaign is completed, share the results with them, to build understanding and goodwill for your next efforts.
- Analyze for insight. Review performance against your plan. Did you achieve your targets? Why or why not? If that LinkedIn or magazine ad, for example, didn’t result in any leads, does the ad’s call to action need tweaking? Or perhaps you need to look at a different tactic for reaching that target market. Feed this knowledge back into your marketing planning to help you achieve better results next time.
What metrics do you use to gauge the success of your marketing campaigns? Tell us about them in the Comments section below.