How do you stop wasting money on marketing?
Whether you are a small business owner, a CEO or a marketing director, you don’t want to waste money on marketing. You want to make sure that every dollar spent is going to either generate more leads, or bring more customers through your door, or to your store.
So why do we waste money on marketing sometimes, and how do we stop that? How do we know that what we are doing is working, or that it is effective? How do we track what is working, and identify what’s just a waste of money?
Respect for Marketing
76% of B2B marketing professionals agree that tracking the ROI, or Return on Investment of their marketing, efforts, gives marketing more respect (Forrester’s Q1 2007 B2B Marketing Measurement Online Survey)! So how are you going to track your ROMI (Return on Marketing Investment)?
Return on Marketing Investment
You have probably heard about ROI (Return on Investment) but have you ever heard of ROMI, or Return on Marketing Investment? This is how we can quantify the impact that marketing dollars have on our bottom line, and how we can justify or prove that marketing is worth it!
But it’s not just about numbers. There are certain things like branding, that is hard to measure or place on a spread sheet. Its harder to demonstrate top of mind, or being in the right place at the right time, or referrals in a way that’s easy to count and display in the boardroom, but these things are still important.
Being able to demonstrate a clear ROMI is especially important when budgets start to shrink (such as in a recession, during a pandemic, market downturn) as marketing budgets are often the first thing to go, even though they should be the last thing that goes. Being able to ‘prove’ (or just as importantly, disprove) that your marketing tactics are working is the best way to stop wasting money, and get the results you are looking for.
Collecting data and knowing how to evaluate it can help you pivot when you need to, so that your dollars are going to areas that will give you the most ROMI. This is how you turn nothing into something, make the most with the least, and streamline the whole process.
But how do you know what to measure?
The purpose of measuring your marketing inputs and outputs gain knowledge. And the only way to gain knowledge, is to start measuring!
You gain knowledge by measuring what you treasure, dumping what you don’t, and automating what you hate. You’ve got to stay on top of the latest trends, and understand what’s best practices for what you’re trying to accomplish.
But to collect data that’s meaningful and relevant, you need to create a plan, and then execute it (because talking about it is a lot of fun, but that’s not how you’re going to get the work done)!
So first, establish what you want to measure, define what you want to see. Then set up a regular schedule to review, and then improve based upon your findings. Metrics are worthless if they don’t change your activities, so remember to execute on your plans.
The elements you have chosen to measure are your KPI’s, or Key Performance(or Promise) Indicators.
Execute – Review – Improve
And remember, this is a cycle!
What exactly are SMARTER goals?
Specific, measurable, attainable, relatable, time based, ethical, and recorded.
How do you define what these might be? You start by asking questions. Put on a curiosity hat, and start by taking a look at your current stats. That means your budget, your ad spend, your Google analytics, your social media impressions, identify all the elements that you can put a number to, and start here! This is your benchmark, and this is how you will be able to measure your treasures!
Specific: This means no “about” or “around.” Hard, specific dates and numbers can’t be fudged, or flubbed, or shrugged off.
Measurable: Can you measure it in some way? Almost everything is, even if it’s a little abstract or sentimental. For example, sentiment scoring can measure a seemingly unmeasurable initiative, on a scale of 1-10 how do you feel a particular branding initiative worked? And why? What’s the narrative suggesting?
Attainable: Don’t throw some pie in the sky number out there. “One BILLION likes before the end of the quarter!” probably isn’t reasonable. But a 30% increase might be, so keep that in mind.
Relatable: Does your goal mean anything? Particularly, does it mean anything to the people who are responsible for that number?
Time-Based: Someday isn’t going to cut it here; you need to put a date on those goals. Not because you’re necessarily a failure if you don’t reach them, but so that you can gain knowledge. How long does it REALLY take to pull off this initiative or project? Now you will know.
Ethical: This should go without much explanation. If it’s not going to build goodwill or foster the greater good in anyone’s life, don’t do it.
Recorded: If you didn’t take pictures, it didn’t happen. And this goes for screenshots and data too. Record your measurements consistently, and accurately.
This also sets us up to be able to determine CAC, or Customer Acquisition Cost. This way, we are better able to understand how much it costs to bring each and every one of our customers through the door.
CAC (Customer Acquisition Cost)
How much does it cost you to get each customer? In order to understand this, you need to track it, measure it, and evaluate it. Then, pivot if necessary. The purpose of measuring your ROMI is to fine-tune your spending so that you are able to target your ideal customer (one who wants your products and services and sees value in obtaining them) more efficiently.
Now when you are looking at your CAC, it’s important to take into account EVERYTHING that you are spending budget-wise. That includes salaries, sponsorships, signage, etc. And remember to eliminate the outliers in this scenario, so that your data isn’t knewed.
For instance, if you have only had ONE six-figure client walk in off of the street, that doesn’t mean that you necessarily need to spend $10,000 on a new door, potted plants and mood lighting for your entryway.
As daunting as it may seem, you need to keep up with digital trends and technology in order to keep yourself from wasting money. Different demographics are on different platforms, so you won’t reach a 75-year-old the same way you’d reach a 25-year-old, and vice versa.
Also, what matters to you? Every business is a little unique, and so some metrics will matter more than others. That’s why it’s important to track EVERYTHING, but know what your KPI’s are.
And that anecdotal information? You know the “someone told me that this was the best place to get a banana split” conversations you hear from clients? Don’t be afraid to ask them WHO told them, so that you can better understand how people are finding you.
Ways to Know.
There are many different ways to measure all the pathways that are going to lead your customers to you, but there are also many ways to measure how efficiently they are finding you too!
This is not an exhaustive list, but it’s designed to get you thinking about all your marketing efforts, and enable you to narrow it down and fine tune your spend.
- Awareness ( do they know about you?)
- Engagement (are they communicating and interacting with you?)
- Understanding (do you understand your audience?)
- Belief (what does your audience believe or hold dear?)
- Message Testing (try A, B testing. Which one worked better?)
- Surveys (ask your audience what it wants to see!)
- Reach (how are they being reached, and how far?)
- Frequency (are they getting enough of you at the right time?)
- GRP’s (fancy talk for who saw it. What percentage of the population?)
- Impressions (did they see in their newsfeed?)
- Media Impression (how many people saw it overall?)
- Accuracy of Coverage (did it reach who you wanted it to?)
- Advertising Value (how much ad space, or how many impressions did I get for the money?)
- Equivalency Sponsorship (what’s the equivalent ad spend?)
- Behavior (did the ad or content get the customer to do what you wanted them to do?)
Remember, the more you measure (consistently) the more information that you have to generate your CAC (Customer Acquisition Cost) and the easier it will be for you to uncover and then optimize your marketing spend and strategy!
Have questions about ROMI, CAC, KPI’s or anything else we covered here today? There are many ways to keep up with the latest trends, tips, and technology, but nothing beats working with a professional.