[Smart Marketing] Marketing Planning: Chapter 8

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December 11, 2003

Henry Ford is attributed with the famous quote, "I know half of my marketing is working. I just don’t know which half."

Successful measurement of any marketing initiative is important in determining the efficiency of the effort. No matter how effective your marketing is, if it’s not efficient — meaning if you’re not making money with it — then what good is it really doing?

There are, at the end of the day, two ways you can determine if your marketing is measurably successful. One is incremental. The other relies on some perspective.

GAINING CUSTOMERS AND REVENUE. Your marketing effort must result in preferably both net customer gain and net revenue gain. All the great marketing in the world won’t help you if you’re losing customers out the back door faster than you’re bringing them in the front door. So, if your service doesn’t meet the expectations of your customer, even though your marketing is introducing you to lots of new opportunities, you’re not really growing your business. And, if your operational expenses exceed your operational revenues, unless as the old saying goes, you make it up in volume, you’re not growing your business.

So let’s for the moment assume that you’re providing great service and you’re keeping most of your current customers. If you’re trying to measure your marketing incrementally, meaning does each dollar you’re spending over a given period of time translate into a noticeable increase in leads and then sales, then use a somewhere between four- and six-to-one rule of thumb. If you’re generating between four and six new dollars of revenue for every marketing dollar expended, then you’re marketing is probably working on an incremental basis.

My preference for measuring the success of a marketing initiative is different and a little bit "softer" than just on a "dollars out, dollars in" basis. It ties to the philosophy that ours is a need-based business, requiring that consumers have a real or perceived need for one or more of our services that stimulates a call for our assistance. That philosophy is manifested in a marketing strategy based on awareness, meaning that I want the marketplace aware of my company so that when they have this real or perceived need, they’ll remember me and then call my number.

Having bought into those two key elements of my thinking, I then measure leads, sales (both dollars and numbers) and gross revenues on an annual basis, January of this year against January of last year, and so on. At the end of the year, if my philosophy and strategy are correct, and if I’ve executed my plan by getting my message of differentiation in front of my primary target consumers, then I should, by all accounts, be successful.

If I am successful, I continue doing the same things until it stops working. If (and so far this hasn’t been the case, knock on wood) the numbers don’t demonstrate a 10 to 20 percent growth in both customer base and net revenue, I would back track to make sure that I had the right message, presented through the right media, to the right customer, at the right times. If the numbers weren’t there, I would probably be able to identify where I misfired.

Both incremental and strategic measurement methods are viable. If you’re in a tactical, offer-based marketing environment, use the incremental method. If you’re in a strategic, awareness-based marketing environment, use the annualized, strategic method.


THE END. This completes our series on marketing planning. Let’s review. First, have a strategy. Then, by setting and sticking to a budget, identifying your demographically targeted customer, geographically locating that customer, nailing down the duration and timing of your campaign(s), getting your message of differentiation squared away, selecting your media and determining your method of measurement, you stand a pretty good chance of being successful.

But remember…the best marketing you can do is to have a great image and to provide great service. All the rest is icing on the cake!

The author is president of MPB Communications, a subsidiary of Massey Services Inc., Maitland, Fla. He can be reached at budbrewer@pctonline.com.