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Measuring Marketing Success

One of the most touted terms in the business world is ROI (return-on-investment). We have heard this term used to track a variety of different initiatives but many fail to properly measure the ROI of their marketing efforts. Often, people find it difficult to track these efforts; however, measurement is critical to gaining support from upper management and ensuring your efforts are providing results. A basic understanding of how to measure marketing ROI will help guide efforts and allow for proper planning in future years.

Why Measure?
Branding is another frequently touted buzzword. ROI measurement helps to determine your customers' and prospects' perceptions of your brand image and overall performance, especially compared to your competitors. This provides measurable analysis of the often abstract concept of branding. Second to branding is the strategy that you implement to market your brand. By quantifying achievement of specific goals and targets, ROI can help ensure that your strategy is effective. Your marketing strategy is the implementation of tactics such as advertising, public relations, trade shows, etc. Many companies fail to evaluate these activities and continue to just do the same items each year because they have always done them. For example, consider a construction firm that exhibits every year at a major trade show. This activity accounts for 20 percent of their marketing budget each year and they continue to go despite the fact that they have never received a qualified lead from the event. A clear evaluation of the tactics in place will help ensure that your efforts are producing results. Finally, sales leads generated through individual marketing tactics should be quantified and qualified in order to prioritize marketing investments. This cannot occur if ROI is not being measured.

Now that we know why ROI should be measured, we should also examine the roadblocks to measurement. Often, marketing and sales professionals don't know how to measure marketing ROI. One of the reasons for this is that there are few successful examples that can be easily followed. This can be even more challenging for construction firms because even fewer examples exist for this market. Internal tracking systems can hinder ROI measurement as well. If a marketing plan does not exist or contains unclear objectives, tracking efforts can be very difficult because marketing efforts are not concentrated and merely are thrown together without proper thought. Finally, firms often do not properly budget for ROI measurement, because they incorrectly assume that it should be free. While there are many cost-effective ways to track efforts, some will require money and time. Even when efforts are measured, firms fail to track every project and only sporadically evaluate marketing efforts.

What Can Be Measured
Many people are surprised at the number of marketing efforts that can be measured. Marketing can be measured either quantitatively or qualitatively. Quantitative refers to those that can be expressed as a quantity and qualitative refers to those items concerning quality. The first item that can be measured is marketing output activity, which quantifies the output of the efforts. Placements quantitatively measure the outcome while awareness qualitatively measures customer recall of the output. Attitude qualitatively measures the influence that the output had on a customer's behavior. Contacts quantify the initial behavioral response. Finally, you should examine sales with the overall marketing investment against the results.

For example, measuring placements includes evaluating impressions of how many people received a direct mail piece or saw an advertisement. To evaluate this, you multiply the circulation number by 2.5. For measuring ad dollar value for public relations efforts, multiply the length of the article by the ad rates. Since media coverage is earned, many experts argue that it is more credible than advertising, so it should include an additional multiplier of 10. The content analysis for public relations includes examining the content for prominent placement, picture and key message inclusion and lack of competitors mentioned. Further, the PR piece should be evaluated to see if the majority of release, direct quotes, company name, product/service name and contact information is included.

Measuring awareness requires more effort such as using surveys or other tools to determine if anyone remembers seeing your marketing communications. This is because it measures outcomes and not output. Similarly, measuring attitude requires tracking studies, snapshot surveys and focus groups.

To measure contacts, you need to evaluate it for separate marketing efforts. For example, for PR/advertising/direct mail, you can measure the number of placements or pieces mailed, ad equivalencies, response rate, conversion rate, average order and cost. Similar items can be measured for trade shows, websites and customer events.

Measuring sales also is crucial to assessing marketing ROI tools. One of the simplest ROI tactics to implement is asking prospects "How did you find out about us?" This enables you to learn from prospects what efforts are working and reaching them. Be sure to record your sales and customer information.

How to Measure Marketing ROI
There are five steps to measuring marketing ROI that you can begin implementing immediately. First, set measurable marketing goals that include quantification, deadlines, purpose and an action plan. Second, use multiple measurement tools. Third, agree on what is being counted such as identifying what you are trying to measure, what data you are collecting and what data will look like in the final report. Fourth, use existing measures before creating new ones. Finally and arguably most important, effectively communicate and present ROI findings. It is important for your team to understand how marketing efforts impact the bottom-line positively. While tracking marketing efforts to show ROI takes some time and money to implement, the results will mostly definitely be realized when you sit down to make your next year's marketing plan.

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