How do you get the most out of your marketing spend? There’s no point in spending the money on marketing activities unless you have the ability to measure the results. Otherwise, how will you know which activities to stop, and which ones to repeat, as they’ve been so successful for you? The following checklist is by no means comprehensive, but here are a few guidelines to getting the most out of your marketing dollars:
1. Define Your Marketing Objectives, for example:
- Generate sales leads
- Educate the market about your products/services
- Build customer and partner relationships
- Increase sales
- Build brand equity
- Raise/promote your company’s profile
- Send a specific message to the target market
2. Set the measurement criteria:
- Sales volume/leads
- Client retention
- Client churn/new customer acquisition
- Market share
- Customer satisfaction
- Value of client business
- Product/brand recognition
3. Collect the data, and analyse:
This is very simple to measure, providing you collect the information. Often, companies will run a promotion using advertising with a special offer, and not bother to record, collect or act on the leads. An example of this is a metropolitan car company which runs ads in the country at considerable cost, and then loses most of the leads generated as the salespeople based in the city are too busy with their own local leads and customers to follow up. If you don’t have a mechanism to capture the leads and make the sales, then any marketing activity to improve sales will be a waste of money.
A client of mine contacted a graphic designer, in response to a print ad she had read, which had the obvious goal of generating leads. She’s still waiting for her call to be returned, a week later… If you can’t follow through, then don’t spend the money on advertising.
As we all know, it is hard work and time consuming to acquire new customers. When we have acquired them, we need to keep them. Measuring client retention is important, and marketing activities that reinforce with your existing clients why they should be doing business with you, are important. The marketing activities are more likely to be personalised and one-on-one, but retention is easy, and important, to measure.
Measuring churn goes hand-in-hand with client retention. Many years ago, one of the mobile phone companies spent literally millions of advertising dollars on acquiring new customers (“connections”) and all the while this activity neglected their existing customers. All the special offers and rewards were designed to bring on new “connections”, but did nothing to reward their existing customers. The result was a base of customers who had little or no loyalty to their supplier, and could be easily won over by competitors with special offers. This resulted in an industry frenzy where customers were constantly defecting, and although the size of the market grew, the important thing to remember is that for all the marketing dollars spent and new customers acquired, almost as many were ‘churning’ to competitors. At the end of any period the net number of new customers was actually gained at an enormous marketing cost.
This is measured by individual companies making estimates as to what their share of their market is, as well as by some industry groups which collate the overall industry share data, and independent companies who provide some market share statistics for some industries. Market share is a significant measure of the success of a company’s marketing activities, but since it can be ‘bought’ it is not necessarily a good financial measure of profitability or margin. For example, some companies will sell their products at significantly reduced prices in order to win sales and market share, but the overall result may be reduced profitability. So when discounted pricing is involved, the question is always, what is a more important measurement, share or profit?
You must be careful when you use this indicator, to ensure you are actually measuring the things that are important to your customers, not to you. For example, client relationships are all about people, and your customers may not particularly ‘click’ with the person who is assigned to look after their business. This would not necessarily come out in a customer survey, and may not be anyone’s ‘fault’, but it could ultimately be the cause for the customer to go elsewhere. However, in every other way the customer may be delighted with the overall service they receive. If you’re going to measure customer satisfaction, take a benchmark survey as a starting point, then compare results and improvements at regular (annual) intervals. An excellent measure of real customer satisfaction is referrals. If your customers are happy to independently refer new clients to you, then you could consider that they are happy with your service, and satisfied customers.
Value of Client Business
If you are able to offer your customers new products and services, or ongoing offerings, and you are communicating that to them effectively, and making offers at the right price and time, and making the benefits clear, etc, the value of each of your key customers should increase.
Tracking value is a good indicator of how your client’s spending patterns are changing over time. Ideally, you could track them from when they first became a customer (depending on how long you’ve been running your business and how many major customers you have). If they continue to spend more with you each year, then this is a good broad indicator that your marketing is paying off. You’re doing the right things. If the customer value is declining or stagnant, you need to reassess your specific marketing activities with these particular customers or group of customers.
Marketers use advertising to create and increase brand awareness. Advertising could be television commercials, radio, billboards and outdoor signage, newspaper/magazine print advertising and even sponsorship. These forms of marketing are the hardest to measure. However, if they are done with a specific objective to improve brand awareness and are run over an ongoing period of time, then measurement can be made via market research. You must take a benchmark measure again – what’s the starting point. Then after a period of time measure the research results again and see how recognition has improved. This research is conducted as a comparative test of consumer recognition of your brand against other brands.
Marketing activities such as advertising, product launches, customer relationship building events and activities, are all difficult to measure, and usually cost considerable amounts to do properly. However, if you have a specific goal in mind, and you have the ability to capture the measurement data, you can analyse your results and know exactly what works, and what doesn’t. Just remember, what do you want to achieve, where are you now, and did your marketing activities get you to the destination goal?