For most small business owners, having effective marketing campaigns that consistently produce favorable ROI’s is more important than ever. Although that may seem rather obvious, the factors that contribute to profitable marketing or advertising campaigns may not always be as obvious. In this article, I will review the steps that I use in my own business, as well as my clients, to make sure marketing goals and objectives are met and the campaigns produce profitable returns.
Planning
Before any marketing campaign is even considered, you must determine what it is you want to achieve. As obvious as this question is, I frequently consult with many small business owners that do not even consider this when they begin their campaign. Many people assume that as long as you are spreading the word, you will get business from it, so it’s all good. In reality it may play out that way sometimes, but often times it does not. Even if the campaign was profitable, it might’ve been more profitable with better planning and tracking.
Thinking in Reverse
I have a methodology that I practice in nearly every situation where a specific end result is desired, regardless of the topic. You start with exactly what it is you wish to achieve and then break down into the various incremental steps or milestones that would need to be achieved to accomplish that goal. In this particular scenario, let’s say that a hair salon owner wanted 40 new customers per month. Let’s simplify things to say 10 new customers per week. This shop has had its best marketing success using direct mail. They have found that approximately 50% of people who initially call actually show up for their appointment. Some people call for questions and pricing but did not make appointment while others make appointments but don’t show. So the bottom line is, they need to generate 20 inbound calls per week to get 10 new customers. They have also determined that approximately 1% of the postcards they mail will generate a phone call. Therefore they need to mail 2000 postcards per week which will generate 20 calls and 10 new customers. As a side note, without having these important conversion statistics, there would be no way to calculate the effectiveness of this campaign, which I will cover in more detail shortly.
Tracking
Some people may say the tracking should come after the implementation because how can you track something that has not yet started. That may be, however it is important to decide how you are going to track your leads and have the system in place to accomplish that BEFORE the campaign starts. That is a critical factor. Your tracking might be something sophisticated such as a software application or an Excel spreadsheet, but it can also be something as simple as a hand-drawn table with columns or something of that nature that you could make copies of. Ideally you would want to track the time and date of the call, the result of the call, and the amount of revenue that each customer generated. Those are the most important factors to consider when evaluating the effectiveness of a campaign, and also deciding how it can be improved.
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Implementation
Once the proper campaign strategy has been selected and the method of tracking has been established, it is time to initiate the process. There are some details to consider with regards to when you plan to launch your campaign. If you have a brick-and-mortar store, you will want to make sure that you have adequate staffing on the days your promotions and specials are running. You may also want to check your inventory of supplies that may be needed during an influx of business. Nothing will ruin a campaign quicker than not being able to fulfill on the sales you are generating during the campaign.
If you are an online only business, you may want to verify with your hosting company that this promotion doesn’t coincide with any planned downtime they may have. Depending on the nature of your business, you may also want to consider some additional temporary staffing to answer phones or respond to e-mail queries. The quicker you are able to respond to your potential clients and customers, the less likely they are to visit your competitors for the answers they seek.
Calculating ROI
Even if you are mathematically challenged, calculating your return on investment (ROI) does not have to be complicated. Here is the basic concept. Marketing ROI is simply a ratio of the net amount of money you made from the promotion compared to the amount of money you invested. For the sake of example, let’s say the total revenue from a particular promotion is $1000. The cost of the promotion itself was $200 and it required approximately $100 of your time or your staff’s time as part of the process, so your true cost was $300. If you take $1000 minus the cost of $300, that leaves a profit of $700. That $700 profit divided by your $300 cost equals 2.33. To keep things simple that means you received $2.33 for every dollar invested in the campaign. If you want to think in terms of percentage, you will need to multiply that times 100 which yields a ROI of 233%. Refer to the illustration below for a graphical representation of what I’m talking about. It may help you to remember the simple formula.
That is ROI in its simplest terms. There are many other factors that can be considered to make the campaign even more effective, which will be the topic for an upcoming blog post. So stay tuned.
If you would like a more personalized evaluation of your current or proposed marketing strategies, contact the professionals at Your Marketing Crew. We invite you to call us today at 727-210-5046 to schedule a no-cost consultation where we can learn more about you and your business, what you would like to accomplish, and make some recommendations to see if we are good fit. We look forward to the opportunity of working with you to help you grow your business.
Your Marketing Crew provides web design, Internet marketing, and search engine optimization services for many with local Tampa Bay businesses in cities such as Tampa, Clearwater, Tarpon Springs, Oldsmar Dunedin, Saint Petersburg, Palm Harbor, Largo and many other surrounding communities. We also work with many other small business owners located throughout the United States. Give us a call today if you would like to strengthen your online presence and increase your PROFITABILITY.
