Marketing is expensive, and you don’t always get what you pay for—especially if you don’t know what you’re doing!
John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
This is true for many business owners. They may commit tens of thousands of dollars to their marketing strategy, but because they are unable to determine which dollars are translating to more customers and sales, there’s an enormous amount of waste. Worse yet, they don’t have the data they need to improve their marketing strategies, so they continue to do the same thing year after year!
The Difference Between Effective and Ineffective Marketing
Peter Drucker once said, “What gets measured gets managed.”
There’s no denying the power of a well-oiled marketing strategy. Unfortunately, few business owners ever achieve this because they’re failing to measure the results of their marketing campaigns.
This is why it’s crucial to ensure that your sales goals are also S.M.A.R.T. goals, meaning they are specific, measurable, achievable, relevant, and time-bound.
I encourage business owners not to do any type of marketing unless they are able to measure it. If you can calculate the return on investment (ROI) for each of your marketing campaigns, it becomes very easy to determine what’s working and what’s not so that you can then focus your attention on making your valuable advertising dollars work harder for you.
Now, how do you achieve this? Fortunately, it’s not as difficult as it might sound!
3 Steps to Measuring Your Marketing Results
Measuring your campaign results isn’t rocket science! Follow this three-step formula:
1. Add Up Your Promotion Sales
During or following your marketing campaign, tally the sales from your promotion. Thanks to the internet, this is easy to do!
Today, most online marketing strategies use tools like urchin tracking modules (UTMs) and marketing analytics platforms that allow you to monitor traffic, clicks, conversions, and ultimately, sales. If your marketing campaign doesn’t allow you to track these metrics, set it up so you can.
2. Add the Sales Amounts from Upselling and Cross-Selling
First, if your business isn’t upselling or cross-selling to customers, you’re missing out on a huge opportunity to increase customer lifetime value (CLV).
You can do this with virtually any product or service. Think about your smartphone, for example. When you went to purchase it, you were likely offered all kinds of add-ons—warranties, additional data, storage upgrades, extra lines, and even phone cases!
Identify the add-ons that make the most sense to offer with your base product or service and train your entire staff on how to effectively upsell and cross-sell to customers. From there, you’ll be able to track all of your upselling and cross-selling and tag it onto your base sales amounts!
3. Calculate Your Return on Investment (ROI)
Finally, it’s time to calculate your return on investment and determine whether your marketing efforts are paying off.
To do this, take the total sales amount generated by your marketing campaign (including any upsold or cross-sold goods) and subtract your total advertising costs. Then, divide this number by your total advertising costs and multiply the result by 100!
Imagine you launched an advertising campaign that cost $5,000, for example. The results of the campaign were $20,000 in sales and an additional $10,000 from upselling and cross-selling. Here’s how your ROI formula would look:
$20,000 (base sales) + $10,000 (additional sales) = $30,000 (total sales)
$30,000 (total sales) – $5,000 (advertising costs) = $25,000 (net profit)
$25,000 (net profit) / $5,000 (advertising costs) = 5
5 x 100 = 500% (return on investment)
Now, Adjust!
With this simple calculation, you’ll be able to identify what is and isn’t working with your marketing strategy. From here, all you need is a little common sense! Tweak the elements of your strategy that yield lackluster results.
You can achieve this by A/B testing two versions of the same campaign. Scrap the underperforming side and keep the side that is giving you the better results—or A/B test it against a new version of the campaign. Remember to change out only one variable at a time. Meanwhile, eliminate the elements that you feel can’t be improved and aren’t giving you much of a return.
It’s that simple! Measure and fine-tune your marketing strategy to watch your sales soar!