The ways you can market your business these days is HUGE! So it is so important to understand which marketing methods and messages are truly working for you?
Analysing the results of your marketing is vital to figure this out. This will help you focus your budget on the marketing and the campaigns that give you the best return on investment.
Three things to consider when looking at the effectiveness of your marketing are:
1.Consider the return on investment – not just the revenue.
It is easy to focus on the numbers of people responding and the revenue coming in for each marketing campaign – but don’t forget to subtract the cost of the marketing! This will give you a better picture on how well a campaign is doing. Bear in mind that even free advertising usually has a cost associated with it – your time.
2. What is the long term value of that customer.
Remember to factor in the overall value of a customer. Even if a customers first purchase generates a loss, they may still be of great value because of their long term value.
Tip: Try and estimate how long customers are likely to use your services, and what else they may buy. Use your existing customers and their repeat purchase behaviour as a guide to help estimate this.
3. Compare the response across all your marketing, and ideally with a control group.
Your marketing may appear to be effective, but do you know the sales if you did nothing? Or if you offer a discount, do you know what the sales would be like if you offered a lower discount or no discount?
Ideally with all your campaigns and marketing you should have a control group. This is a group of people or businesses that look like the group of people that you are marketing to, but receive no marketing. You can then compare the response rates for the marketed and non marketed group to see the true value of the marketing.
If you want to make sure you are spending your marketing budget wisely, it is absolutely crucial to keep analysing its effectiveness. This will help you to spend your money in the best way, which will give you the best return on investment.