Measuring Marketing Correctly
When we speak with clients we usually ask them what previous marketing activities they’ve undertaken and what the results were. Unfortunately the responses of ‘it worked ok’ or ‘that didn’t work at all’ don’t help us and it certainly doesn’t help the business owner! It’s essential that any marketing carried out is measured and recorded correctly to build a clear picture of what works and set some bench marks when it comes to testing new avenues.
Measurement is not a new term in marketing. However whilst a large percentage of us know that measuring the effectiveness of a marketing campaign is important, only few people measure correctly.
There are variants of methods available when it comes to measuring marketing effectiveness and there can be confusion about which one is the most effective and appropriate to use. In general they all work under the same concept, with a few tweaks here and there to tailor them according to their line of business.
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Response Rate
Working out the response rate of a campaign is a fairly simple calculation you can carry out. If you sent an email to 500 customers and 25 responded through a call to action, then that has provided you with a 5% response rate (25/500*100)
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Cost Per Sale
The cost per sale will help you establish the cost of each new ‘sale’ or ‘client’ acquired through your campaign. If you spent $100 on a Facebook ad campaign promoting a product and gained 5 sales through this, then the calculation would be $100/5 sales = $20 per sale. A great result if the product or service you were promoting was worth over $200 however not so great if it was anything less than $100.
In the same way if you sent out a Direct Marketing Campaign to 1,000 and managed to secure
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Return on Investment
One of our personal favourites, return on investment can help calculate the overall return on a marketing campaign. In this instance we’ll use 2 examples to demonstrate:.
Example 1:
Net Profit – $5,000
Total cost of marketing campaign – $2,000
(includes marketing, production, fulfilment, media, postage etc)
Profit ($5,000) – Investment ($2,000) / Investment ($2000) *100 = 150% return on investment.
Example 2:
Net profits – $30,000
Total costs of marketing – $10,000
$30,000 (profit) – $10,000 Campaign costs – (investment for campaign) / $10,000 (investment for campaign = 200% Return on investment
Ideally you will use a combination of the above measurement to assess each campaign and curate and analyse these metrics to demonstrate what is and isn’t effective.
It goes without saying that if your measurement brought back negative results, it is time to take a look at which points didn’t work. Was it the method, the offer, the content the creative? The options are endless, however by continuously tweaking and measuring you will come up with a formula that works for your business.
If you require any help analysing or reviewing your previous or current marketing, please contact us.