How to measure the effectiveness of your marketing tactics so you can make critical decisions regarding how to invest your marketing dollars
You have put in the time to create a robust sales and marketing strategy and your plan is being executed. Is it effective?
I know, that is NOT the question you want me to ask, but it IS the question you need me to ask. Why? Marketing is not like the Field of Dreams, “If you build it, they will come.” Your marketing plan is more complex than just creating marketing tactics, releasing them and then crossing your fingers hoping they work. By tracking the effectiveness of your marketing tactics on an ongoing basis, you will be regularly assessing what is working and what is not, allowing you to shift priorities and budget towards tactics that are converting for your business.
You have already taken the steps to build your plan by assessing the current state of your business and outlining the steps you need to take to grow. If you have not, we have a free tool that can walk you through the process we use in our Marketing Physical – download it now.
Once you have a plan in place, you will also need the tools to track marketing effectiveness. In this article I will discuss how you can begin tracking the effectiveness of your current marketing program so you can see, on a regular basis, how each of your marketing tools is performing. Ultimately, you will want to begin tracking your return on investment (ROI), but there are a number of other metrics that will help you see the bigger picture of marketing performance.
The first step in tracking your marketing results is to collect data regarding your leads. Where are your leads coming from and how many are you getting on a weekly basis? When you know how many leads you are receiving and where they are coming from, you can start evaluating which marketing tools are working, which are not, and which need improvement for better performance.
Keep it simple to start, especially if this is new to you. What you do not want to happen is you end up spending hours and hours a week tracking your leads only to take time away from your business building activities. You can schedule time on a quarterly basis to do a more thorough review and dig deeper into the data for further clarity.
Customer relationship management (CRM) software can be an effective tool to help track your leads. When new prospects are added to your CRM, you can select a lead source so that you know what marketing tool prompted that lead to take action. Reports can be generated directly from the CRM to provide the number of leads you have received and their source.
If you are not currently using a CRM, then you can begin tracking your leads and lead sources on a spreadsheet so you can collect the data. Your columns should include Marketing Tactic/Campaign Name, Cost, Leads Generated, Cost/Lead, Sales, Cost/Sale, Conversion Rate and ROI. Need help getting started tracking your leads via Excel? Download our free Excel document, the Marketing Scorecard, to get started. Below is how you will use each column.
This is where you will put the name of your marketing tactic or the name of the integrated campaign if you are measuring. Depending on the size and complexity of your business, you can assign leads directly to a marketing tool, such as a specific ad placement, or you can assign them categorically. For example, if you attend networking events, you will want to determine if you track each event separately or categorize them all as “networking.” Another example could be tracking separate marketing pieces collectively as an integrated campaign. An integrated campaign would include various touch points, like an ad, email blast series, lead generation tool and social media posts, all with the same message and call to action. All of those work together towards a common goal so it would make sense to track the effectiveness of those tactics as a whole campaign.
This column is where you put the cost to produce that tactic or campaign. Here you will include the one-time and/or ongoing costs of the campaign. Take and ad placement for example. You will want to include the cost you pay the publication for the ad plus the cost of creating the ad.
How many leads were generated as a result of this marketing tactic or campaign? That is the number you will put in this column. You will want to define what qualifies as a lead for your company. Do they have to take a certain step like downloading a lead generation tool or scheduling a call? Is it anyone who clicks on one of your Google Ads? No matter what you decide is considered a lead for your business, you will want to be consistent in how you apply it to all of your marketing tactics so you can get a true comparison on performance.
This is simply the marketing investment of the tactic or campaign divided by the number of leads generated. This will help you understand how your marketing dollars are being utilized to generate leads. I look at this number along with the investment per sale and the conversion rate. I do not get as concerned with a high investment per lead if those leads are converting at a higher rate than others.
In this column you input the number of items sold. If you are a service-based business and you do not have a specific product you are selling, this number for you would be the number of new clients that signed on with your company during the period you are measuring.
What is the gross profit associated with the number of closed sales for that marketing tactic or campaign? You will calculate this by taking your revenue minus the cost of goods sold.
Similar to investment per lead, this number helps you understand how much you spent on a tactic for each sale it generated.
In this column you will calculate how many of your leads were converted to sales for that tactic, as a percentage. This helps you gauge how well tactics are turning leads into sales. If, for example, a tactic is generating a lot of leads but has a low conversion rate, you would want to dig deeper to try to figure out why. Is it targeted at the wrong audience? Does the messaging need improvement? Does your sales team have the information they need to close the sale?
Here is where you will calculate the return on investment for each tactic or campaign. There are many variables to how you can calculate your return on investment that depend on your business and what kind of expenses you want to include in the cost of your product. For simplicity sake, our free download includes the formula:
Gross Profit – Marketing Investment
If you choose to adapt that formula to an ROI formula that meets the needs of your business, just be sure to utilize the same formula for each tactic so you have a true comparison on performance.
Do you feel your business has the right tools in place to accurately measure the performance of your marketing collateral, integrated campaigns and ROI? Now is the right time to put these tools in place to start analyzing your success. Your analysis, if done on a weekly basis, will show how your marketing campaigns and collateral are performing. It will help you make critical decisions on a regular basis regarding the ways you invest your marketing dollars towards the future growth of your business.
Do you need support discovering the right analytic tools to use in your business? Pace Marketing can help! With 20+ experience in marketing, we work directly with clients who have “built it” but “they” are not coming. We help those clients assess the current state of their business, identify strengths and weaknesses in their marketing plans, and develop the right tools for growing their business through a variety of services designed to meet companies where they are.
Schedule a free Roadmap Call to discover how we can help keep your business on the road to success.