Does the question, “Do you know where your referrals are coming from?” make your palms sweaty and uncomfortable? Not after today! Read on to learn how to measure the effectiveness of your marketing efforts, also known as Return on Investment (ROI).
Without even knowing you, I can guess that you would never spend money on clothes that are the wrong size or buy a car that isn’t powerful enough to get you to and from work each day. But so often entrepreneurs are consumed with running the day to day of their business and running from fire to fire that they don’t plan out their marketing efforts and, instead, just say “yes” to opportunities as they present themselves. The negative effects of not planning are compounded when they never go back and measure to see if it was a good investment. Instead, they check it off their long To-Do List: “Marketing, DONE”. Watch my interview with Long Island Pet Professionals CEO Nancy Hassel on this topicLinda’s Interview on Measuring Marketing ROI
Some of you have a very clear idea of the marketing activities have been most successful –good for you! But for many of you I suspect that you that are in same position as the owner of a $10 million business who recently sat across from me and told me he had NO idea if the $75, 000 he spent on “marketing” the year before actually brought in any business.
The Brand Counselors Three Easy Steps to Positive Marketing ROI
Here are 3 Easy Steps that you ensure that you can always answer the question, “Was that marketing expense worth it?” I want you to think about both monetary and time investments in marketing your business.
DEFINE YOUR GOALS and CALCULATE A SUCCESS ROI TO REACH FOR. This is critical. Why are you spending the money? Seeking new customers, new email subscribers, traffic to your website, blog or Facebook page? Need to increase the number of referrals you have or simply increase sales by a certain percentage
IDENTIFY & PLAN. What are you doing to make that happen? Sponsoring a post on Facebook? Placing in an ad in the local paper? Sponsoring an event? Running a promotion or discount? Buying Google Adwords? Next plan out when you will be making this investment and the duration of the related activity.
TRACK AND MEASURE. Tracking results, whether by hand or using an automated system, is where most people fall down. Today we have so many touch points with our customers and referral sources both online and offline that we need to take time to track.
- If you buy sponsor a table at an event and the cost was $200 and your goal was to gain 200 new email addresses during the event then the cost per email was $1 per and you met your goal, assuming you intended to spend $1 for each email address.
- Another example would be if we are calculating the cost to obtain a new customer- to do this take the amount spent-$100 to place an ad and divide the cost by the number of new customers –let’s say 5- then the cost to obtain a new customer is $20. Is that good? Well that depends on how much it cost you in the past to obtain a new customer.
- If we are taking an ad in a publication and it costs us $900 and all the sales that accompanied a coupon measured $2500 then your ROI would be 270% Return On Investment. Is that good? Here you would also need to include any discounts offered in your coupon.
And what happens when you have a poor return on investment? Don’t be so quick to dismiss the entire effort. There are several variables that could have influenced the outcome so take some time to think it through and bad experiences can teach valuable lessons if you thoroughly track the results.
Time vs. Dollars and When to Outsource to an Expert
In many instances it is less expensive in the long run to hire an expert who can execute your marketing program in a much swifter and more efficient manner than trying to do it yourself. Take a moment to do the math to see where this ends up. You have to assign yourself a salary, you can’t say “If I do it doesn’t cost anything!” because you are spending time and are not getting a true sense of the cost. What could take you 10 hours to figure out and execute could take an expert team 2 hours with better results.