By Hayes Knight – 6 October 2014

Some marketing activities are easier than others to measure return on investment, however there are some best practice techniques you can employ that will have you making better informed decisions. Below we describe five tips that will get you off to a great start…

1.  Make the most of the tools to help with direct marketing

If you are undertaking targeted communication to a database such as a traditional mailing or an email campaign, take advantage of this being one of the most measurable forms of marketing. For example, most marketing focused email programmes provide comprehensive reporting and even allow you to automate follow-up emails depending on the response and your desired outcome. For example, for ecommerce businesses, if a customer has items in their trolley, but not completed checkout, an email can be generated to prompt them.

2.  Use reporting to inform your subsequent marketing planning.

Too often time is not taken to complete the cycle by following up on implementation with the review phase before planning the next marketing activity. The first step is, understanding fully what the metrics mean.

For example high “bounce rates” on a google analytics report should raise questions as to why people are exiting your website having only visited the one page. It could be a technical issue with your site, however it is more likely to be the relevance of the content or even the quality of it. Relevance can be a factor if they have used a search term that has landed them on your site and yet you don’t have much written about that topic (e.g. where a keyword has been used in the meta-data for that page, but the subject matter is not related to it). And if the visitor to your website finds the presentation of information poor or writing is weak, the quality of content is a factor.

3.  Use scenarios to model outcomes and establish the break-even point and projected sales and profitability of the marketing activity

The best marketers are as comfortable with spreadsheets as accountants are. Using realistic response rates, create a number of scenarios by detailing the costs of the campaign (including for example a “per call” cost for handling phone calls, or cost for freepost reply etc.), projected sales/revenue per response and then the profit (or loss) created at different response levels. You can work out the response rate needed to break even this way too. If it is not stacking up, you could look to lower production costs or review pricing to increase the sales/revenue.

4.  Consider through-the-line advertising rather than above-the-line

These days the lines are blurring as traditional advertising is taking on a lot of the direct marketing principles of segmentation, test and learn, and purchase-based targeting.

Above-the-line advertising such as TV, radio, print advertising, web banner advertising etc. which is traditionally broadcast to a large, loosely targeted audience can easily be turned into through-the-line advertising which will make it easier to measure. Through-the-line advertising is where above-the-line intercepts with below-the-line advertising which uses direct response. An example would be where a TV/radio advertisement invites people to call an 0800 number to register their details for a prize draw promotion (those details could then be used to build a database for direct communication), or a print ad has a coupon to redeem something in a store.

It is surprising how many letterbox leaflet advertisements have no tracking in place for measurement. Even a dedicated phone line, a code to quote would help businesses know where the source of their enquiries had come from!

5. Whatever marketing you are doing, use loyalty as a good measure

With a lot of marketing activity focused on customer acquisition, the impact of those same activities on customer retention and loyalty are often over-looked. Many marketing activities kill two birds with one stone, even if the intention was to generate new customers.

For example a retailer’s “20% off day” advertised on TV is likely to pull in new customers, however this will have also been promoted via it’s database (e.g. loyalty card) to existing customers. This activity provides an opportunity for activating existing customers (generating sales) as well as building the database further. A good transactional data system linked to the loyalty card will help businesses breakdown sales into what was generated from existing vs. new customers and therefore provide a better clue of how much response to attribute to TV advertising. However at the end of the day, even existing customers viewing that TV ad are reminded about the brand, further cementing their loyalty in ways that can largely be measured.

How do you know if you are losing loyalty? Simple. Customers leave, they start spending less in value and frequency, interacting less and all those tell tale signs of despondency. If you are keeping a close eye on your measures, you might be lucky enough to do something about it before it’s too late!

Andrea Benvie
Marketing Manager
E andrea.benvie@hayesknight.co.nz