I’ve been learning from marketing for over twenty years.  Strangely, despite having gained several marketing qualifications, it was not until as a self-employed consultant, I got serious about the measurements my worth to clients.  That said, even now it is a pretty hard sell to getmany small businesses to take on help to carry out their marketing.  The reason for this is that I think, like me when I first started , people fall into a trap of accepting that half of marketing works and that there is more luck and art than science to it.  Having been through a couple of recessions now, and using my own money to finance marketing, this tends to focus the mind more clearly on where to spend time and money by learning about what works.  Here’s a few tips on how to get started with metrics.

“It’s impossible to know how to get where you want to go, if you don’t know where you are starting from“  anon

Surprisingly few small businesses ever actually set formal objectives for sales and marketing.  They may well say they want growth, perhaps more sales, but actually they often don’t stop to quantify either.  And more than that, they don’t have a very clear picture of where their current business comes from, what marketing works for them and what does not. Understanding these measurements is critically important as they allow you to more confidently concentrate your marketing efforts on activities that provide a return and therefore make your marketing budget go further.  Without the statements of intent and measures of success that well set objectives provide, it’s not surprising that many people are reluctant to commit money to marketing.  You can waste a lot of money employing specialist (or more usually for small businesses non-specialist) marketing help, if you don’t have this as part of a proper, sustainable marketing system.

So how and where do you start?

Every business plan should have a hierarchy of objectives with the broadest, overarching corporate objectives at the top and gradually getting more specific for each area of the business it covers.  To get to specific marketing communication objectives, here are some of the questions to ask and answer to do the necessary analysis of what your business looks like now.

1. What revenue is the business planning to achieve? Or to put this another way, what income do you require in total?  What do you want to achieve by product, or if more appropriate, market, or even sales person?
2. Typically, what is the value of your average sale, project or transaction? You should also understand how many units are sold per order or contract.
3. Looking at what sales and marketing activity you do now.  The whole point of it is to generate leads that will eventually – sooner rather than later -  convert to sales.  So how many emails, mailings, sales visits etc. does it take to make a sale? This gives you a conversion rate of leads generated to sales closed.  What’s interesting about this measure is that you begin to understand where in the process you need to pay most attention.  If it is early on, then you need to address your marketing communications – perhaps the targeting, the key messages etc.  Towards the end of the process then you may have an issue with the pricing or the sales process.
4. Following on from the above, what does that sales and marketing activity cost?   Once you   understand each of these you are in a position to set some measures of success for what your marketing has to achieve.  You may also be shocked to see either how little or how much time you are spending on marketing and how effective it is, currently.  This should help you to decide whether you should bring in an expert.

Lead Generation – Do the Math!

There are numerous ways to generate leads and having done analysis along the lines of the above, you are in a good position to understand which ones are more effective and efficient use of your time.  You know your sales, you know your costs, so from this, it is possible to calculate how many leads you need your marketing communications to generate.  If you understand your conversion rate, you also have an idea of how many contacts you need to make to convert that to leads. It’s mathematics – the science in the art and science of marketing.  And once you know how many contacts you need, you can start to develop your prospect database.  And so on….

These are some of the key marketing metrics that any new and growing business needs to understand. If you’d like to understand more about how to make your marketing more effective, take the plunge, do the math! Get in touch with Liz@neontics.com