Small business owners often wonder if advertising is worth it. After all, how does one measure the success of a marketing campaign? We all want to see ROI, but how is that defined in the context of a specific business model? In other words, a good response to an ad campaign might not be enough to warrant future spending, unless one can be confident that consistent messaging to the same audience has an exponential effect on response.
Since the introduction of online advertising, small business owners have found that they do have many tools at their disposal for measuring and tracking digital advertising campaigns, yet very few ways to measure offline campaigns. What’s even more challenging is the concept of integrated media measurement, such as the net effect of running a digital display or mobile campaign in conjunction with print or broadcast. Is the print ad giving validity to the digital ad, thereby prompting the “click-thru?” Is the digital ad reinforcing the radio campaign and getting listeners to make a phone call? It is difficult to know which vehicle should get the credit, or what would happen to response if you pulled the plug on one of them.
For many small business owners, analytics — measurement and tracking of metrics — is something they prefer not to think about. This should not be surprising, considering that ROI isn’t nearly as sexy as tracking online conversions or coming up with a concept for the next video ad. In fact, it is so rarely discussed that it’s only mentioned in hindsight as a vague concept that only number-crunchers could possibly understand.
Unfortunately, it is relatively impossible to retroactively add tracking mechanisms to effectively measure the performance of your marketing campaigns. For this reason it is important to think about how you will measure a campaign at the same time you are planning the effort and making a media buy.
Ultimately, the value of your marketing dollars in a given media should determine the percentage of the total expenditure that is given to that vehicle. For example, if Google Adwords has the best return-on-advertising-dollar (ROAD) then it makes sense to continue spending a significant portion of the ad budget here. However, spending on branding and customer acquisition should be evaluated differently, as a longer-term investment that fills the “sales funnel” while validating the company’s importance to existing customers.
In addition to helping your business grow and increasing the efficiency of your marketing dollars, being a smart marketer will also help when it comes time to sell your business. Potential buyers want to see that a plan is in place to sustain the company’s market share, generate new business and promote customer loyalty.
Five Ways to Measure Marketing Performance
While it’s hard to argue that tracking your marketing campaigns is important in determining ROI, what does this mean in practice? Is your small business equipped to analyze the performance of your marketing campaigns? Here are five tactics that many small business owners use to figure out what’s working and what isn’t.
Website Analytics: This tactic is one of the easiest to implement and it provides a very revealing look at the performance of your ad campaigns. By tracking the origin of entry to your web site, analytics can show where your customers are coming from when they land on your home page – display ads, social media sites, search engines or simply typing in the URL. You will also know which days and times are best for visits to your site, and how long people are staying engaged. If your site is set up for e-commerce, you will also be able to track web-form submissions, conversions and sales
Phone Call Tracking: This may not be quite as exciting as website analytics, but it is still a very important way to track the success of your ad campaigns. Simply track how many phone calls are generated from each campaign so you can see which ones are making the phone ring. For example, you could use a different phone number for each campaign, or ask the receptionist to ask callers how they heard about the company.
CRM Sales Tracking: If your company uses a customer relationship management (CRM) system to store leads and sales data, you can use this to track non-ecommerce sales and activity. When used effectively, these tools can be a fundamental part of measuring the performance of your marketing campaigns. However, its effectiveness depends on how diligent your staff is about entering information into the CRM.
Split A/B Testing: Split campaigns, or A/B testing, are marketing tactics that businesses use to help optimize conversions. While this is a valuable form of analysis, it is only effective if you use it in conjunction with other forms of tracking. For example, if you create two versions of a web display ad and landing page and you want to see which one generates the best response, you must also be properly tracking phone calls, web conversions and leads throughout the campaign.
KPI Tracking: A Key Performance Indicator (KPI) is something that must be decided upon before your campaign begins. A KPI is any data point that will become the key measure of success for the campaign. KPI tracking allows you to make data-driven decisions to improve the overall marketing performance of your campaigns. Your KPI may be phone calls, click-throughs, conversions, leads generated or revenue growth. In essence, this single data point will be the basis of which the success of your campaign is measured. A KPI will also dictate the creative direction, media selection and measurement tactics used for a specific marketing program.