Know-How Exchange : Research/Metrics

You need to create the right format for each project. Start with the project objective. How is it measured? How will you know what success looks like? What's the standard?

If it's weekly new leads, then you need to report new leads by week. If it's revenue generated over a 6 week period, then you need to track that. There is no one-size-fits-all report format. Of course, in each case you need to measure both costs and results.

Don't forget, too, that when you're calculating ROI, the return is a net profit number, not a gross sales revenue number. It's usually OK to use an average variable profit/mmargin number, and most of the time a rough estimate is OK, so you don't have to figure it out to the third decimal place.

Dear abblaz88,

Perhaps one of the best ways to track a marketing campaign is to direct differing parts of the results you're looking for to differing courses of action, meaning, you set up various calls to action and ask that the action taken connects to a certain task.

For example, you could direct inquiries from one style of ad in one publication to call an 800 number. In an identical ad placed in a different publication, the ad remains the same but the telephone number changes. Or the number could be the same in each ad with the request for information being directed to a different extension number, or to a differing name per ad.

This way, you can track the response to your call to action for differing ads in differing publications and tally the net ROI (or response) for each ad based on the action taken.

The same basic method can be applied to P.O. boxes.

I know this sounds a little primitive, but when it's tightly controlled it can be effective. You just need to decide what methods you're going to put in place to do the tracking, and you need to decide exactly what it is you'll be tracking and why.

But if your intention is to direct traffic to a website, then suddenly, you have an unlimited (and an extremely low cost) method of tracking because you can set up individual landing pages (or even whole sets of pages: landing, sign up, sales, payment, download) WITHIN an individual website, and all keyed to specific ads, campaigns, or clusters of campaigns—which means you can then track results pretty much to the penny per ROI.

In truth, this is what all businesses ought to be doing with every aspect of their marketing so that unprofitable ads can be pulled BEFORE they cost you more than they cost to set up.

I firmly believe that the litmus test for any ad ought to be: did it bring in more over a given period in terms of net profit than it cost to set up?

If it did, the ad can be considered a success.

If it didn't, there was something wrong with:

1. the placement of the ad(both in terms of where it appeared and who it appeared before);

2. the message (what was said, to whom it was said,
and how it was said?);

3. the offer (was it compelling, did it solve a problem, was there enough emphasis on value and benefits?);

4. or the call to action (did you engage attention through scarcity, compulsion, risk reversal, and desire, and was there a deadline?).

There are other reasons for the failure of an ad, but those are some of the most important ones, at least, in my book they are.

Anyway, I hope this helps you in some modest way.

Gary Bloomer
Wilmington, DE, USA

The cost is the amount you spent to get your message out there (printing, mailing, staffing).

If your message had no time-sensitive offer and was simply "We're here when you're ready", then computing the ROI on this is a bit nebulous. Compare the # of inquiries/closings with your average pre-marketing message. If your used any of the methods that Gary mentioned, then you have a tangible way to measure results.

Your tool could be Excel or Word or any other tool you normally use for your CRM.

Dear Allen

I do hate to contradict my learned colleagues who have responded above, but I guess that it is the difference between a sycophantic network marketing site where you always have to say nice things to people or you won’t be in with a chance of a bit of business from those you have flattered and this one is precisely the opposite. We answer questions without providing a quotation for our services and if you don’t like what you hear from us, that’s fine too.

You have already received some good advice, but I would beg to differ on certain areas because CRM, analysis and forecasting i.e. the ROI of a campaign measured both after the campaign and as a forecast, before the campaign is almost never looked after by a spreadsheet.

Firstly, I think that we all agree that you must be able to quantify your costs for any given marketing event. Many marketers assume that this is both a given from the outset of a campaign through to trying to make sense of the results.

It is not and you need to agree with your senior management what costs you accrue to any given campaign. This will differ from company to company, determined by things like do you take into account the fixed costs of people who both initiate and respond to your marketing. If you a manufacturer, you will for example need to establish whether your sales margin is based on an ex-factory price to make a product or on an out of the door cost based on all overheads.

I would suggest that you enlist the support of the finance director to ensure that your means of measurement of cost is the same as that which is adopted by the board.

So, once you have an idea of how to cost your campaign and how to account for the profit from the campaign, the last thing you need to do is to work out how you monitor the results. This is a huge subject and one where a little though will save you many man-hours of needless work. I beg to differ with Jay, but there is no way that it is economical or effective to use Excel or Access as a means of carrying out your programme.

Logging costs is a doddle, based on an agreement on the terms of financing your department.

Measuring results is utterly depended on your product, your market, the campaign you have engaged in and the time scale over which you are prepared to measure things. If you cannot link incremental revenue to a given campaign, then you are sunk. You can’t do it.

If however you use some of the above advice and ensure that you have a means of monitoring the responses from a campaign and which campaign they came from you are half way there. If you cannot directly measure these statistics and there is no way of changing your modus operandi then you will need to use some kind of forecasting model to look at the results from a particular exercise from the order book alone. This is far from satisfactory, but as my colleagues have said, you cannot measure ROI unless you can measure the investment , measure the return and then link the two.
If you have not built that into your campaign then you will have to use interpolation by comparing results after the campaign with the order book for a similar period where there was no such activity. This is very unsatisfactory, but it is often the only available option.

I would take up the idea of using a CRM system to both hold the data on the costs and to log the enquiries. Then, based on your company’s sales model you can construct a sales pipeline or sales funnel which is based entirely on how your company views enquiries, leads or initial sales results.

As to how you should report it – that is a matter of choice and a matter of the package with which you are most familiar. The beauty of a CRM system is that if you ask those who install it to set up a reporting system which is based on how you think that your company sells things then you can have, on a single system, something which starts off with nurturing leads and follows it through to analysing the results whilst guiding your sales people towards closing the most favourable prospects.

Please let us know a bit more about your tasks – I already understand your product from your profile, but if you would like more specific advice, I will need to know a bit more about your products and your sales and marketing operations.

Here is a different approach to the majority which you might want to take on board or not.

Most pipeline or sales funnel management systems base their results on how well sales people follow the company sales methodology and sales plan. I’m afraid that your company’s sales plan as a means of monitoring ROI is now probably redundant.

Instead, you need to understand the client or customer’s buying plan. With the advent of the web and the availability of information of a kind being available to all, many aspects of the old sales model are redundant.

The upshot of this is that your ROI model and, should you decide to deploy it, will depend on your ability to integrate the clients buying behaviour rather than how many boxes you ticked as a professional sales person.

Sorry if I’ve made this sound more complex than you envisaged, but the reality is, that once you have itemised your sales model and your customer’s buying model, the whole thing can run like clockwork, whilst being constantly monitored and modified to ensure that forecast ROI matches genuine ROI and that forecast sales marry with booked sale in hindsight. If you get that bit right, you can literally transform the profitability of a sales operation almost overnight.

We call this SPM or sales performance management and to date, we do not have a single customer who has not benefited from the approach. ROI on the system has varied from a couple of days to a year, but the effect on the ROI of a given campaign is usually measured in days.

Best wishes and sorry for waffling – It’s late in the UK!

Steve Alker
Xspirt