Clicks 'n Conversions Blog

This article was first published April 16, 2007 on the Tatum Marketing blog

If you’re like most of my clients, you’ve tried a little marketing – maybe you’ve even tried a lot of marketing – but you’re just not happy with the results. More often than not, this situation can be avoided or fixed simply by applying a little math and the right metrics.

It’s helpful to think of marketing as a process that allows you to attract qualified prospects and create a relationship that makes those prospects want to do business with you. There are many steps in that process and each of them can be measured, evaluated and ultimately optimized.

Let’s look at a simplified generic marketing process to see what can and should be measured.

We can safely (I hope) assume that you have established new-customer revenue goals. By taking that revenue number and applying a few other numbers such as average deal size, closing ratio, response-to-lead ratio, and prospect-to-response ratio, you can figure out how many potential new customers you need in each “bucket”. In other words, how large does your prospect pool need to be to generate enough interested prospects to develop into qualified leads to pass to the sales force. (I’ll provide more details on how to arrive at these numbers in a future post).

It is ridiculously easy to monitor the size of each of these prospect buckets. If the number of prospects in any of these buckets falls below the target number, you know that sales – and therefore revenues – are likely to be off track at some point in the future. This is a great early warning system that gives you time to adjust your activities BEFORE sales begin to lag.

Likewise, each of the activities in your inquiry generation and lead development programs can be monitored for effectiveness. Most likely you are – or will be – using some combination of direct mail, email, telemarketing, advertising and events to generate awareness and interest in your products or services. Best practice or industry average response numbers exist for each of these activities, and you can use these numbers to a) determine how many such activities you need to implement and b) how well your campaigns are working.

For example, 5% is a great response to a direct mail offer. By setting this as a goal for your direct mail program, you can measure the response and easily determine whether or not your program is doing what it should be doing. If it’s not delivering enough responses, you know you need to do something – change the offer, change the list, maybe change the creative – to get back on track. And the beauty of this is, you know all of this early enough to fix the problem before it wrecks your sales.

I admit, the above explanation wildly simplifies the challenges of figuring out what to measure, setting goals, measuring and then taking action. But my point is that our ability to achieve great results from marketing investment is highly dependent on our ability to measure effectiveness and adjust accordingly. Otherwise, we’re just making guesses that may or may not be taking us in the right direction. Now, THAT’s a great way to waste some money!