There’s no denying it. You cannot consider yourself a great marketer unless you know your numbers.
Understanding how to evaluate a Marketing Plan, including whether it is delivering the best possible results, can save you money and help you ensure the success of the company growth plan. Even though any evaluation should start by reviewing the Marketing Plan based on its objectives, here we include a list of ways to continuously assess its success:
1. Market Reaction – The actions of your competitors are often a barometer to measure the success or failure of a Marketing Plan. If competitors race to copy what you’ve done, the plan is affecting them, and it should be working. If your campaigns go largely ignored, there may be an issue, and evaluation should be set in motion.
Also, your marketing partners will offer feedback about whether your Marketing Plan is working. Partner feedback reveals the effectiveness of your efforts to suppliers and vendors. These outside members of the team can feel the effects of a successful campaign before you do because they have more direct interaction with customers.
2. Customer Response – Customer response in all its varied forms can help you to determine what type of reactions your marketing efforts create. Customer service feedback, online engagement, and click-thru-rate can reveal what your customers think of your efforts and which campaigns or program have the greatest impact. Basic questions like How did you find out about us? can reveal which initiatives in the Marketing Plan are reaching the customer and driving sales.
Other complementary metrics can serve to measure the effectiveness bases on the tactic or vehicle used in the plan. Make sure you are promoting in the right vehicle. Choose media to suit your selected audience and be as accurate as possible. Online efforts will have more opportunities to gather results on customer response, with the option to optimize continuously.
If your market reach is expanding, the effectiveness of your Marketing Plan is the probable cause. Marketing that makes its way into new segments, either by customer recommendation or natural indirect growth, indicates both a compelling marketing message and a validated value proposition. Remember that it is always important that the product or service delivers on its value proposition, tied with the campaign.
3. Sales Performance – They should be going up! Examining the numbers can be the fastest and primary way to determine whether your plan is working. For example, if your overall sales for the last period totaled $10,000 (without marketing efforts) and your total sales for this period ended in $15,000, you can deduce that your Marketing Plan is having a positive effect. Take into account other variables like a rise in prices or sales strategies, but with all the external factors included, and in raw numbers, you are selling more this period.
Salespeople can be a great barometer for the measurement of marketing effectiveness. Ask for their feedback to determine whether the efforts are effective. If the feedback is overwhelmingly negative, or customers are not responding, you should revise your plan and better address the sales force needs to assure growth.
Also, check your sales conversion rate. The best approach here is to look at your historical records and determine whether your conversion from lead to customer rate has improved. Remember that different strategies run on various sales cycles. A brand-building effort typically requires a long-term investment before it yields a noticeable profit. Meanwhile, sales promotions can provide small returns faster. Effective sales conversion is an important part of achieving growth, so make sure you assess your success at closing the deal, rather than just focusing on generating leads.
4. Cost-Per-Acquisition – You aren’t a top-notch marketer if you’re not tracking the one metric that matters above all others: Marketing Cost-Per-Acquisition (CPA). Don’t get me wrong; all effectiveness metrics are necessary. But, while all metrics are important to any well-run effort, Marketing CPA it’s the quintessential metric for determining real return on investment. It doesn’t matter the market or customer response, at the end if the marketing effort is not generating revenue, it’s not successful.
Tracking the historic CPA for each product is important. If the market conditions remain the same for the new period, the goal for your marketing team should be to decrease the Marketing CPA. This metrics serves as an option to determine the budget needed to comply with business goals and an efficient way of manage the complicated planning process with the finance department. If you are looking for outside investors for your company, the Marketing CPA metric takes more importance.
Marketing CPA is important to investors. They can determine business profitability by looking at the difference between how much they can profit from customers and its costs of acquisition. Investors are concerned with the current relationship, not on future promises. They use it to optimize the return on their investments. In other words, if the Marketing CPA can be reduced, the company’s profit margin improves, and it makes a larger profit. In the end, investors are more interested in providing the resources the company needs, while the company continuously improves its profit margins.
5. Return-on-Investment – Does the marketing investment bring in enough new or repeat business to justify the expense? Return-on-Investment(ROI) is the top concern when it comes to marketing expense. The end goal is to check whether your marketing investment results in profit. All the other indicators can help you evaluate effectiveness, but you must measure the amount spent versus its benefit to assess efficiency. In the end, the business needs to make a profit to survive.
Even if you think you’re getting a high ROI overall, maybe you can do even better by changing or eliminating unproductive tactics. When it works, marketing ultimately converts leads into customers. This conversion process should prove itself in a calculable profit. Examine all the elements of your Marketing Plan to see which justify themselves financially. You can calculate an overall measurement, but a more accurate breakdown by marketing initiative will tell you exactly which effort worked. Continue with the efforts that work, and optimized the efforts that fall short. The Marketing Plan should be revised accordingly.
One important metric to evaluate ROI is to develop a Customer Profitability measure. According to master marketer Philip Kotler, a profitable customer is “a person, household or a company that over time, yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling and servicing the customer.” Calculating Customer Profitability is a major step in evaluating the ultimate response to not only the Marketing Plan, but the entire operation. You will find out that some customers are unprofitable, so you will be able to focus on acquiring and servicing the most profitable prospects.
CONCLUSION
With “half my media spend is working, I just don’t know what half”, marketing pioneer John Wanamaker summarizes the difficulty of measuring the effect of marketing investment. While marketing is not scientific, a commitment to evaluation ensures that each effort can be properly understood and future strategies can be developed based on performance. Today, many companies can engage in highly targeted campaigns to track prospects as they progress from leads to loyal customers. We recommend businesses the assembly of a Marketing Effectiveness Scorecard to monitor the results of a Marketing Plan. It should track relevant metric from all five points to assess the effects of a plan in achieving the overall business goals. After all, you aren’t a great marketer if you aren’t tracking the numbers.