Are You Measuring the Effectiveness of Your Marketing & its ROI?
All businesses should measure the effectiveness of their marketing spend with meaningful metrics, but too often we don’t. You should approach your marketing spend with a strategic ‘investment mindset’ and not an ad hoc ‘cost mindset’.
Do you measure your website or sales conversion rates, for example? Fortunately, digital marketing tends to be easier to measure than traditional activities, and over 70% of budgets are now being spent online.
However, many small businesses don’t have a defined budget or know how much they spend on marketing. So, their budget is often wasted on unplanned marketing communications that isn’t following a clear marketing strategy; culprits can be: last minute ‘advertising offers’; cowboy SEO retainers; and unmanaged, long term, Google Ads campaigns.
Here are some suggested tips on marketing metrics and ROI:
- Ensure everyone asks new customers where they heard of you, then record the data in your contact manager or CRM system.
- Measure conversion rates over time.
- Analyse your customers’ acquisition costs.
- Ensure Google Analytics is properly set up with goals.
- Measure the ranking of your target keywords in search engines and how they change over time (or ask your SEO specialist).
- Measure your performance against your marketing objectives.
- Monitor your management accounts, particularly your sales and profits.
- Agree a range of Key Performance Indicators (KPIs) as your ‘KPI Dashboard’ and review them every 3 months. Track the trends over time.
But, sometimes you still have to rely on gut instincts to judge whether the expected return justifies the cost of the campaign.
Do You Have a Clear Marketing Budget?
Some marketers recommend that small and medium sized businesses should spend 7% to 8% of turnover on their marketing budget.
In practice, many SMEs spend 2% or less; however, a tight marketing budget is still a ‘budget’. If this marketing investment is spent well, it can have a huge impact on business growth and revenue.
But, promoting your business on a small budget should not be ‘marketing as cheaply as possible’. Cutting costs with home-designed brochures and adverts, poorly conceived websites, incomplete search engine optimisation, over-reliance on unengaging social media or old fashioned selling techniques, can damage your business and brand.
