What’s the Return on Your Marketing Investment?
Whether it takes the form of advertising campaigns, branding initiatives, or targeted networking, marketing is an integral part of any firm’s business strategy. But, unlike other parts of a business plan, the results of marketing efforts can seem difficult to measure. Are new customers calling because of your marketing initiatives? If so, which initiative produced the most bang for your buck? Consider whether your current marketing activities were selected because there is clear evidence that they are effective, or simply because your competitors are doing the same thing.
Given the costs associated with marketing—and the risk of losing out on potential business when marketing is ineffective—your firm can hardly afford not to calculate the return on investment of your current marketing strategies. A cost-benefit analysis may, for example, reveal that your company is sinking money into a series of expensive ads generating little business, but a blog that costs nothing to operate is attracting high-profile clients.
Among the leading reasons why firms fail to measure their marketing efforts is the perception within the organization that measurement is too hard, too costly, and too time-consuming. It may be inaccurate to judge a particular marketing initiative or technique based on such amorphous targets. Just because one ad failed to produce the desired results does not mean another ad, or the same ad placed in different media outlets, would not produce better results. While the aggregate return on the annual investment in print advertisements will be a strong indicator of the usefulness of this approach, a closer examination of any changes in business activity immediately after a particular ad has been placed could yield some startling results. Only by carefully mining your marketing data will you discover exactly which approaches worked and in what particular contexts.
Before launching each marketing initiative, define your objectives and consider how you will measure whether those goals were reached. If, for example, you place a series of ads online and in print, find out if the volume of phone calls or if the number of website hits increases immediately after the ads appear. If your company issues a press release, log any press inquiries, monitor the media outlets to see if the story receives coverage, and check for a noticeable increase in phone or web traffic after the stories appear. Be alert to any changes in business activity following less formal networking events, such as speeches or presentations.
A useful measurement tool is an intake system that surveys new or potential customers on how they came to contact your company. This information can be gathered when they first call your company, place an order, or log on to your website. For a more in-depth profile, ask existing clients to complete a market research/customer satisfaction survey, which can be sent out by mail with business reply envelopes.
Many businesses spend too little on marketing and even less on tracking the success of their marketing initiatives. These companies may, therefore, tend to underestimate the potential impact of marketing campaigns. By spending a bit of time and money assessing which approaches are working, you can better target your marketing budget expenditures and determine whether it makes sense to devote more—or less—resources than you have in the past to getting the word out about the products and services you offer.
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