I you have no marketing budget, you’re making a mistake of fairly epic proportions. If you are spending on marketing but don’t track what marketing activities are working and how well, your mistake could be much bigger. [level-members]
First, let’s address the no marketing budget. If you have no marketing budget, what you’re saying is that you already own your market completely. This could be the case in a market where there are literally no competitors or in a market where transportation or other issues effectively isolate you from any competitors that do exist. If this is your situation, congratulations, you are in a very small minority.
For the rest of us, marketing is worth doing because the goal of marketing is to create more incremental profit than the cost of the marketing. You don’t want to spend more than you bring in, but you certainly want to explore the ways that will bring in additional profit, and ways that will improve on the marketing performance you’re already producing.
As obvious as this reality is, many businesses fall down in practice because they simply don’t track how well their marketing activities work. Meaning, sales may go up, but the shop owner doesn’t know why.
That’s potentially more damaging than not doing any marketing, because you are, in all likelihood, diluting your positive performance – or throwing additional budget on efforts that are losing you money.
Tracking performance doesn’t have to be tough. It’s actually quite simple
- Track what each marketing activity costs
- Track what revenue each marketing activity generates
- Calculate whether the revenue generated is worth the initial outlay.
Tracking expenses is relatively easy. You know what you spend. You simply have to record the amount related to each marketing effort individually. This should include not just the cost of the ad, but the discount you’re giving and any operational expenses that might be associated with the activity. (Creating custom shop displays, for examples.)
Tracking revenue is not quite that easy, but it’s not as difficult as some would have you believe. Tracking revenue is why coupons exist in supermarket circulars. It’s why promotional codes exist on websites and in emails. It’s why salespeople will often ask how you heard of their company.
These things allow you to assign the revenue being generated to a particular marketing effort, or to the normal run of business. Doing so will allow you to determine the difference between what you’ve spent and what you’ve gained.
It’s really that simple. Of course, if you’re a business school grad with an MBA, you’re cringing at this simplification. There are other complicating factors, some of which are important to acknowledge. (Like whether a promotion is simply cannibalizing existing sales and lowering margins on revenue you would have generated even without the marketing.) Most, though, can safely be ignored by stand-alone retail businesses like ours.
So put some coupons or promo codes or “secret” words out there in your regular online marketing world. Compare them to results you see from print or direct mail you might be doing. Patterns will emerge and your marketing results will improve. The secret is in the measurement.
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