As a marketing consultant and the owner of an advertising agency, I am always asked how can a business measure if their advertising campaign is working . Here are five techniques to find out:
1. Are you seeing an rise in prospects and sales beginning when you launched your new advertising campaign? Are your prospects and sales up 2%, 5%, 10%, or more? Make sure you monitor all of your leads and sales so you can clearly see the outcomes of your advertising.
2. Are prospects contacting you because of your advertising campaign? The way to learn is to ask every single prospect how they heard about you and you need to monitor the answers so you understand exactly exactly where each lead (and purchase) comes from. Was it your website? Was it from an advertisement you placed? Was it from a direct mail campaign? Was it from a radio spot ? You need to track where each prospect and purchase comes from so you know what marketing channels are working and which are not working.
3. Are past and existing clients purchasing much more from you? A top quality advertising campaign can bring old customers back and increase the purchasing frequency of existing clients.
4. Are you seeing an increase in referrals? A top quality advertising campaign will get your present customers and your target marketplace talking about you. This will lead to an increase in referrals.
5. Is your advertising campaign profitable? Advertising is an investment and the lifeblood of your business enterprise. For your business to be profitable, your advertising campaign must be profitable over time. Nonetheless, there are quite a few different opinions on how to ascertain if an advertising campaign is profitable. Here is the correct way to determine if your advertising campaign is profitable:
When determining if your advertising is profitable, you need to look at advertising as a long-term investment, simply like acquiring stocks, real estate, or mutual funds. When evaluating your advertising you need to take into consideration repeat sales from each new customer your advertising produces. Nearly all corporations generate the majority of their sales and profits from repeat sales, NOT first time sales. Understanding this concept is one of the secrets to building a successful company.
For example, let’s say you run a small quarter page ad in your local shopper coupon magazine. This modest ad costs $300. From that solitary ad you attract three new clients who each purchase $50 worth of your merchandise. From that data you would think that you had a loss of $100 on that ad simply because you paid $300 for it but you only produced $150 in gross sales. But let’s look at the long-term impact of those three new customers.
Let’s say that every one of those three new clients purchases an additional $250 of items from you over the following 11-months. Once you consider that into consideration, your $300 ad has now produced $900 in product sales. And, what if every of those 3 customers purchases an extra $300 of merchandise from you the following year? Now, your original $300 ad has created $1,800 in product sales over a 24-month period. To put that into perspective, if you acquired $300 of mutual funds and in 2-years your $300 investment was worth $1,800, you would be leaping for joy! That is why you need to view the profitability of your advertising on a long-term scale, not on a short-term 1-2 month scale. Advertising is an investment to produce long-term clients and repeat sales. Your focus as a business owner must always be on producing faithful long-term customers, NOT one-time sales.
Let’s broaden the picture a lot more. Let’s say one of your three new clients loved your merchandise so much that she told two of her pals about you, and her two close friends each turns into a long-term customer of your business. And, what if those two buddies each buys a few hundred dollars worth of products from you over the next couple of years? Do you now see the great long-term value of that $300 advertisement you placed?
Now that you possess a greater knowledge of advertising as an investment, it is critical that you monitor the source of every single new buyer (i.e., did they locate you in the yellow pages, direct mail, radio, Net, etc.). Whenever you talk to a new client you must ask the purchaser, “How did you hear about us?” Then, you need to track the source of that customer in a spreadsheet or a CRM system and monitor how many product sales each client makes over time. This is the only way you can actually determine if an promotion tactic is working. Yes, this requires time but it is really worth it. And, a good CRM software program can make this monitoring very easy.
In summary, before you toss in the towel on your advertising tactics simply because they are not quickly producing a profit, you have to first recognize the value of a new customer over time. Quit looking at advertising as a short term cost and start viewing advertising as what it genuinely is — a long-term investment to the success of your enterprise.
Tags: Advertising, marketing
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