Suzanne Harrison |
on January 7, 2010 |
category: integrated marketing |
How do you measure success?
Over the past year, I’ve spoken with marketing leaders from a number of companies who are grappling with just what yardstick to use when measuring their return on marketing dollars spent. In these economically challenging times, there’s an ever-greater focus on accountability. What to measure — and how to measure — are at the top of the list of questions to be answered.
Of course, you need to have a strong grasp of your sales cycle and all the conversion points along the way. You need to understand your cost per lead and cost per sale. You also need to know the lifetime value of your customer in order to make the wisest marketing choices. These are basics. The other question — the one that has surprised me time and time again from clients recently — is what costs should be included when figuring ROI.
Many companies who have advertised their products and services have traditionally measured their ROI against media alone. If they spent several thousand dollars to place a TV spot on a number of stations, it’s likely they only measured the results against the cost of the ad time. Never mind that they spent a lot of money in creating and producing an ad, in researching their target market, or in trafficking the spots. In the midst of one conversation with the marketing director of a major fast food chain, he looked up in surprise and said, “Well, I guess I should include my salary…and my team’s salaries as well!”
He’s right. If you truly want to understand—and repeat—your success, you need to be honest with and include all marketing costs when measuring your return. Know your real benchmarks. That’s the only way you can truly measure one campaign against another.
Comments:
3/8/2010 at 2:39 p.m.
Cost allocation is an art
agree w/your comments, but cost allocation is always an art. say you spend $x to acquire a new patron. the lifetime value of that patron will be impacted by future marketing (including offers). determining how to evaluate the success of the acquisition program when so many factors can impact it after the first visit presents a real challenge
>>brian flynn, seattle WA
