Most business owners are like P.T. Barnum who famously said, “I waste half my advertising dollars; the only problem is I don’t know which half.”
Peter Drucker provides the key with his famous saying, “What gets measured gets managed.”
And therein lies the key! If you want to know what marketing is working for you, 1) commit only to marketing with measurable results, and 2) calculate your rate of return on the investment (ROI) of every marketing campaign.
To do this:
- Add up the sales from the promotion. You should be able to tell who responded to your advertisement or marketing campaign. You could do this by including a special code on every coupon you put out.
- Add additional sales amounts from your upselling efforts. Be sure to train your staff on what items should be offered with the promotional item.
- Calculate your return on investment by adding the sales from the steps above and dividing by the cost of the advertisement or marketing effort.
Now, unlike P.T Barnum, you will know which half of your advertising and marketing is working. From there it’s easy. Eliminate what isn’t working and do more of what is making you money. Then just sit back and watch your profits soar!