How do you judge the ROI of your marketing tactics?
We recently asked our social media followers if they had any questions about marketing or business growth, and we got multiple questions revolving around the same core subject:
How do I know which parts of my marketing are really working for my business?
This question can seem simple, but the implications are far-reaching. When we work to tie specific results to individual marketing channels, we are actually answering multiple questions at once, and all of them are useful and important. When you look at your marketing, you ultimately want to know:
- How much business is coming from which channels?
- How well is one marketing effort performing relative to the others?
- What audience is responding to each of my marketing efforts?
- For every dollar I put in, how much profit can I expect to generate?
- What marketing should I continue doing, and what should I stop?
You should be able to answer all of these questions if you take the right approach, but know that some answers will be more clear than others. The heart of what we are discussing here is attribution. We want to be able to look at the customers we have and tie them to one or more of our marketing efforts. The path from prospect to customer is often not a straight line, so the picture we paint may not be as high definition as you’d like, and you should know up front that some marketing efforts are simply harder to track than others.
That said, all of your marketing—no matter what it is—should have a metric attached to it, and be wary when a marketing guru discourages you from thinking that way.
Whatever your business and whatever your current marketing mix, you can borrow our process for evaluating your marketing.
Step 1: Know the Job and Desired Result
While all of your marketing is working toward the same general goal of generating revenue, each thing you do to attract, convert, and retain customers should have a distinct role. We often see businesses lump all of their marketing into the category of “attract new customers,” and that oversimplification of how a potential customer interacts with a business will waste valuable budget.
Some parts of your marketing should attract new prospects. Other parts of your marketing should help you convert those new prospects into leads. Then you want another piece nurturing those leads. When they convert, you want a measurable process in place there as well because the buying experience is actually a part of your marketing too. And finally, once a prospect has converted, you should have marketing vehicles in place to retain them and to motivate them to talk about your business to their friends.
Thinking about your marketing this way is not groundbreaking. Some people call it a sales funnel. Others call it the buyer’s journey. Whatever name you choose, taking the time to map what happens at every step (and identifying what parts of your marketing are doing the lifting for each step) helps you to more accurately measure its effectiveness.
We use a sales funnel diagram to help our clients map their marketing vehicles, and you can do the same. Make a big list of all of your marketing tactics in play, and then match each to an appropriate role. Some items might fit in more than one bucket, but most should have one specific job.
Here is an example sales funnel for a yoga pant manufacturing client that I totally just made up for this exercise:
- Facebook ads
- Instagram hashtags
- Trunk shows
- Blogger outreach
- Google search
- Social media platforms
- Customer reviews
- Free ebook on Woman in the Workforce Trailblazers
- 15% discount for new customers
- Newsletter sign-up pop-up
- Email marketing
- Abandoned cart marketing
- Shopify eCommerce platform
- Up-sell suggestions during checkout
- Personalized thank you email
- Handwritten note in the order
- Brown paper packaging with postcards and freebies
- Automatic follow-up after delivery for feedback
- Bonus coupon codes for customer appreciation
- Email content on women’s issues and movements
- Request for reviews
Word of Mouth/Social Cloud
- Feel-good social media content
- Blog content
- Sharing photos of happy customers on social media
Even for a relatively small and completely imaginary e-commerce business, there is a lot going on here! So take a stab at mapping your own marketing engine. This part of the process alone will likely reveal points in your marketing that could use work.
Step 2: Establish Attribution
Every single piece of your marketing will generate data. Some marketing tactics generate more data than others, and that’s okay. You should know up front, however, that no data will be 100% complete and give you the definitive answer on what to do next. Even the best data will require you to build your own conclusion as to what is the right next step, but what you will get is a better idea of how things are working now.
To identify key performance indicators—to use an industry buzzword—look at what a piece of marketing is supposed to do (based on the exercise you completed in step 1), and then measure how good of a job it does at moving prospects to the next stage. For example, marketing tactics designed to generate exposure or awareness for your business should be getting in front of the right audiences and bringing those audiences into your store or to your website. The ads themselves might influence the sale, but that’s not their job. Their job is to get someone’s attention and to push him or her into interest building.
So if you are running an ad, digital or analog, impressions are not actually the metric you want. It’s good to know, but the more important information is how many people actually checked out your business because of the ad.
Here is a cheat sheet for questions to ask yourself about your marketing tactics for each stage:
- How many of the right people did I reach?
- How many of those people took the next step of learning more about my business?
- How many people are exploring my products or services on my website or in my store?
- How often does someone come to my website and immediately leave (bounce)?
- Are prospects reaching key pages (product or lead capture)?
- What percentage of prospects who visited my landing page became leads?
- How many prospects added an item to their cart?
- Are prospects opening and reading my emails? Are they clicking through?
- Are prospects responding to my follow-up sales calls?
- How many of those prospects are returning to my website?
- How many items do prospects view before they purchase (in other words, how easy it for them to find what they want)?
- What is my units per transaction?
- How long does the average checkout take?
- If I survey my customers, what will they tell me about the purchasing experience?
- Are prospects opening and reading my emails? Are they clicking through?
- How often do customers purchase again?
- What is the total lifetime value of a customer?
- Are customers sharing the content I share with them?
Word of Mouth/Social Cloud
- Are people talking about business online? What are they saying?
- Is my social media presence growing?
- Are prospects and customers continually engaging with my content?
Yeah, wow, that’s a lot of work. If you want a simple starting point, do this:
- Set-up Google goal and event tracking. You want your website to track when people hit the “thank you for buying!” page and also when they do something important like call or email you. We wrote a previous blog about this that might be helpful.
- For non-digital marketing like billboards or flyers, try using a unique coupon code/promotion name for each individual channel and also consider getting unique phone numbers for various print advertising or regions so that you can better track the interest these tactics generate.
So that will help you get an idea of how your marketing is working, but how do you decide what to change?
Step 3: Marketing Diagnostics
Data is best when it’s actionable, so getting the lay of the land is one thing, but what you really want is to improve your business. You might quickly identify some obvious wastes of marketing budget, but in other cases the story might not be simple. From one data set, it’s not always easy to say what the next step should be. Don’t freak out, but you might need more data, and here’s why:
- The marketing idea might be a good one, but the execution is off
- The marketing idea is working really well, but the next step in the funnel is broken
- How well the marketing is executed is irrelevant because a critical part of the business itself might need fixed
- Or the marketing idea is just plain bad
I wanted to make sure this point was made because we often see clients cycle through half a dozen marketing ideas only to discover months and several thousand dollars later that their advertising was doing fine but their website experience was so poor that even the right prospects didn’t stick around. Or, in brick & mortar terms, everything about the brand and the product can be stellar, but a cranky sales associate at the register can undermine all of that work in just a few terrible minutes.
So before you totally pull the plug on one of your marketing efforts, try the following:
- Evaluate the performance of the sales funnel steps before and after a piece of marketing
- A/B test (run two different versions of the same tactic) to see if one performs better than the other
- Walk through the customer experience yourself, from start to finish, and ask family and friends to do the same
- Survey customers about their customer experience and what they would improve
Step 4: Keep Steppin’
For some clients, we walk through an expanded version of the process we described here on a monthly basis, continually assessing and refining how we attract, convert, and retain new business. If you are playing very instrument in your one-person band, try to walk through these steps quarterly so that you can catch problems and also capitalize on new opportunities as early as possible. If you aren’t checking in on your metrics regularly, you will miss out on big growth.