How simple management information pays dividends…
10th February 2017 - 0 comments
Written by Andrew Fellows.
It’s no great revelation to say that understanding the efficacy of your marketing is key to developing a robust and impactful marketing strategy year-on-year. Analysis of key indicators such as lead origination, conversion rates, cost of lead acquisition and average margin will help to provide the insight required for planning and implementing consistently successful, cost-efficient marketing programmes.
So why then, do so many businesses still allocate marketing spend based upon a hunch, or a general rule of thumb? Whilst, with an experienced marketing manager, intuition can be effective, it is very difficult to justify the budget allocation with this method, especially when things don’t go according to plan!
For some perhaps it’s the old ‘if it ain’t broke, don’t fix it’ scenario. For others maybe there’s a lack of access to the right information and for most, there will be an element of it being a time constraint. Whatever the reason, the following basic steps can be taken to minimise assumption, improve accountability and make the marketing budget go further:
• A simple matrix can be established to actively track leads from acquisition to sale, which then allows a sale to be attributed to a specific marketing activity. This activity will have a cost attached to it, from which we can establish a cost of sale (from a marketing perspective).
• The cost of sale can be measured across the various channels employed by the company, which in turn provides the return on investment across these channels. Armed with the information that certain activities produce particular returns, the basic building blocks of marketing activity can be allocated. Then it is a case of understanding some of the subtleties involved in the marketing activities themselves.
• Find out what is driving these sales. Is it the channel? Is it the product, or is it the message? By keeping two out of three consistent and employing them across multiple channels in a variety of formats, it is possible to establish which products/channels/messages (and in what combination) are most effective and working hardest for the business.
• By measuring the leads into the business and the actual sales out, an approximate conversion rate can be calculated. This figure provides the multiplier for the number of leads required to convert into real business at the calculated average margin, and so how many leads are required to hit the sales budget figure.
Recognising your main revenue drivers saves time and money when planning future activity. Once it is understood how many leads each channel will generate, and at what cost, it is possible to calculate the conversion rate of leads into real business and the monetary value of this business. The year’s marketing activity and budget can then be planned with a degree of accuracy relating to the likely revenue generated from the scheduled activity.
Of course there are always external forces and dynamics in play that prevent complete certainty but these steps will ensure a degree of justification and a basic platform from which to measure progress as accurately as possible.
For a fresh perspective on your marketing strategy, get in touch.