Marketing Tips that Measure Up

There is a saying in management: “If you don’t measure it, you can’t manage it.” Indeed, measuring the effectiveness of marketing expenditures can help you manage the funds your business spends on advertising – and redirect efforts that aren’t measuring up.

Below are some tips on how to get started. There is also a short case study of a small specialist engineering company that made changes to its marketing methods using a few simple measurements.

Where to Start
· Keep it simple and learn as you go along. Experience shows that, once you get the hang of measuring, it becomes an everyday part of what you do.
· Start by recording the costs of the various marketing and communications activities you use such as advertising or direct marketing. Then have a simple card or database system for recording and tracking enquiries and leads. By analysing this data, you can see how much each enquiry, lead or order is costing.
· You can then make decisions about your marketing and communications mix. Perhaps, as in the case study outlined below, you can save some money while still achieving your objectives. Perhaps you can get a better result by changing the mix.
· Remember that measurement is not something just for managers. Why not get your workforce to measure its processes to identify areas for improvement?
· When you have mastered the basics of measurement, you can start being a little more ambitious.

Measurement in Practice: A Case Study
A small engineering company was selling industrial machines across UK. It had 2 sales staff whose role was to demonstrate equipments on customers’ premises and chase orders. They were very successful: one in four demonstrations resulted in an order within 6 months.

The problem for the company was generating new enquires and leads for the sales force to follow up. First, they tried giving the sales staff lists of companies in relevant sectors and asking them to make appointments for themselves. By measuring activity levels and orders received, it soon became clear that the sales staff was spending all its time generating leads while the numbers of demonstrations and orders were declining.

The company then employed a marketer with the task of generating and qualifying enquiries. She agreed on a budget with the MD and decided to advertise in trade magazines, to use PR and to attend selected exhibitions and trade shows. She kept a record of the amount spent on each advertisement, press release/press briefing and trade show. By asking enquirers to ask for ‘Jim’ or ‘Sarah’ (who were not real people), she was able to tell where the enquiries originated. By keeping a small database of all the enquiries and their progress, she was able to calculate and monitor on an ongoing basis the cost per enquiry, cost per lead and cost per order.

This helped in planning the company’s communications activities. By now, with 3 sales staff ‘on the road’, she knew how many advertisements she needed to generate and convert enough enquiries into appointments to keep the sales staff working efficiently.

After a year or so, she noticed a decline in the number of enquiries. Her data proved that there was a clear trend, not just a poor response to a particular campaign or deterioration in the conversion rates between enquiries and orders. After researching the costs, it was decided to try a pilot direct marketing approach using a bought-in customer list. As before, she kept a record of the costs and the numbers of enquiries and leads generated, so she was able to compare the relative costs of leads generated by advertising and by direct marketing.

The pilot showed that direct marketing generated sufficient leads and did so for less per lead than advertising. The company dropped advertising and adopted a mix of direct marketing, using its own database and its own telesales staff, and specific trade shows. Rather than simply recommend an increase in the advertising budget, she had been able to maintain the levels of enquiries AND reduce the marketing budget by 5 percent.

The company also measured customer satisfaction. Shortly after a machine was delivered to a customer, the marketing manager would send the customer a short questionnaire asking about the level of service provided by the company. At the end of a maintenance or repair visit by an engineer, the engineer would ask the customer to answer a few simple questions from a questionnaire. The results were recorded and monitored by the marketing manager and led to a number of improvements in the delivery and maintenance visit processes. These in turn led to an increase in measured customer satisfaction levels.