Measuring Marketing Results and ROI
The goal of any organization should be to earn and/or increase revenue. By including ways to measure short-term objectives and return on investments, companies can improve the chances of achieving those goals. Results can be used by leaders to guide the decision-making process. Here are some of the most important components to developing measurable outcomes.
Customer acquisition cost (CAC)
CAC is an index that reveals the average cost to gain new consumers. This information is also used to determine how much of an investment a company is making to attract customers on a monthly, quarterly, semi-annual or annual basis. This is important because it affects the bottom line – a company’s revenue. The lower this cost to acquire customers, the higher the revenue.
Customer life cycle
The customer life cycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. Companies must be aware of the costs associated with influencing a customer to buy their product or service and maintain that relationship. Loyal customers help sustain companies.
Return on Investment time (ROI)
The costs a company incurs to land a client, which can include anything from packaging to marketing, commercials, and web sites are just one half of the investment part of ROI. The return is when a client purchases a product or service. A productive return on investment is when a company earns more in sales than it spends on marketing.
Businesses need to know how a marketing team will measure the success of any campaign before investing in that campaign. This is sometimes referred to as a measurable outcome. Without the ability to measure, how will a company know if their money is being well spent?
Examine data and measure performance
Data helps companies compare expected results to actual results and can influence a company’s direction. In order to answer questions about improving sales, marketing strategies, and customer acquisition these things need to be measured in some form or another. For example, what are the company’s sales for the year, and the last four quarters?
What marketing strategies did the company use and how much did they cost? What were the company’s customer acquisition costs for the year and the last four quarters? Numbers aren’t the sole reason for a company to move in a certain direction. They do however help a company make good decisions to remain profitable. Quarterly information is vital because it helps a company identify upward, downward, or consistent trends.
Business plans, flexibility, and inclusiveness
The most successful companies are those who do not rest on the accomplishments of the past. A business plan remains effective if data is examined consistently, especially when a company is successful. You don’t take your hands off the wheel when you’re driving a car just because it’s going straight ahead. Constant corrections and vigilance are key. Checking data, coupled with reliable employees can identify trends that work well, but also reveal situations that require minimal correction if you catch them early.
An organization’s business plan should be established through extensive examination of data and input from employees and leaders. A productive plan should have flexibility built in; changing as needs or as the organization require. Strong internal collaborations with staff help companies anticipate and navigate challenges and meet objectives. Companies need employees in order to function at their best.
The human factor
Companies often have the staff and tools, but simply need help putting the pieces together effectively. While data is useful and has its place, it doesn’t exactly consider the humans involved in performing day to day functions. Using the experience of the staff is a highly effective way to learn what is most important in building good business practices. It also helps with employee buy-in when it comes to implementing processes. It makes employees feel valued and important to the company’s success.
Some employers avoid making employees feel valuable for fear that it may influence the discussion of raises. Consider this – companies benefit from keeping valuable employees rather than spending time and money to hire others. High turnover is also a leading cause of product/service inconsistency and loss of revenue. Keep and reward good employees – it inspires good work habits in other employees and is the hallmark of an exceptional and profitable company. You can’t get good results without good people.
For more information on success strategies for your organization, contact the experts at Advertising Avenue. We’d love to help.