Measuring marketing effectiveness for a company’s marketing activity is essential for ensuring that the benefits are maximised and the cost optimised ….. but how? It’s a well know cliche that “I know I waste half the money I spend on marketing, I just don’t know which half“. Marketing really is like any other form of investment – how much was spent and what did it deliver?
Being able to measure the results (or outcomes) for individual marketing programmes is key. A first step is to understand your sales and marketing pipeline. For a given month, this means knowing the number and value of:-
- new leads generated
- quotes you produced
- orders you closed
- sales invoiced
It is very easy to manage these pipelines by anecdote rather than hard data. Too many companies don’t quantify how sales are generated across the business. Armed with this sort of analysis you can take a cold, hard look at the incremental effect of any particular marketing activity. For instance you may be running a pay per click campaign on Google. You will be able to see how many clicks were generated, that’s easy, but how may leads/enquiries were produced as a result and can this be traced through to real sales? Another example would be a telesales campaign where the objective is to get a salesman appointment. How much are you paying for every appointment, and how many of these appointment were successful? A client I work with knows that for every 20 leads he gets, he will quote on average to 10 of these and from this he will close around 4 orders. He knows the value of these orders so can easily work out if the cost of generating the original leads was profitable. Can you do something similar for your business?
I would have to acknowledge that these sort of measures can be difficult to produce, but it is very worth doing. Calculating for instance the cost per sales lead or cost per order will allow the business to focus the most beneficial activity. The feedback from knowing the effect of a campaign means that the activity can be “fine tuned” to improve its performance. A good approach is “to work out which marketing works best… and then do more of it!”. Sounds simple, but good measures are the only way to deliver this.