Some marketing activities require several attempts before determining if they are worthwhile. Since consistent exposure over time yields better results, repeat the marketing activity several times for six months or even a year before making a decision to cancel an ad or try something new. Keep records of your marketing activities, tracking the following aspects of your initiatives:
- Media used
- Timing of the promotion
- Reach (the number of persons exposed to the promotion)
- Responses generated
- Sales generated
- Return on sales (the sales generated minus the cost)
Evaluating your marketing initiatives can be tricky. Keep four things in mind as you evaluate their effectiveness:
External factors – Realize that your actions are not the only factors that may affect your results. You can make the best marketing decisions possible, but if the economy dips into a depression, you’re not likely to see rising sales figures. When deciding how effective your marketing efforts are, you need to take external factors into account including economic shifts, competitor moves, and your industry’s general trajectory.
Cost-benefits – Evaluate effectiveness from a cost-benefit perspective. If you look only at the results of various initiatives, you may be fooled. Consider two initiatives—one that increases sales by 20 percent and a second that increases sales by 5 percent. Which one would you choose? You shouldn’t answer yet because you don’t have enough information. What if the 20 percent increase cost you $10,000 while the
5 percent increase cost you $100? Now the answer becomes obvious, right? The 20 percent increase cost you $2,500 for each 5 percent increase, so it is clearly more expensive. But wait. What if the 5 percent increase required your management team to spend 90 percent of its time over a month to complete? You have to remember your real internal costs as well.
Feedback – Consider the validity and reliability of your feedback mechanisms. If you send a traceable e-mail to 2,000 customers and 20 click through to take advantage of the offer, your data is fairly reliable. Certainly the data is much more valid and reliable than tracking the results of your branding efforts, which will be difficult to evaluate at best. Don’t forget to consider the costs of various feedback mechanisms that you might develop. Some costs may be high enough to be prohibitive or not worth it from a cost-benefit standpoint. For example, hiring a national market research firm to evaluate your changing brand image may not be worth the substantial cost you may incur.
Some marketing efforts can be more easily tracked than others. Don’t choose an alternative just because it can be easily tracked but keep the validity and reliability of your data in mind as you analyze your results. Don’t put too much stock in areas that can’t be easily tracked, and don’t forget to do all you can to develop good measures of effectiveness—as long as they don’t cost too much.
Long term perspective – Don’t be fooled by short-term results alone. If you’re like most entrepreneurs, you’re trying to build long-term value, not short-term results. You could lie and cheat your customers through your marketing messages and raise your revenues 50 percent in the short term but kill your business in the long term.
FastTrac Kauffman Foundation