Some businesspeople love marketing. They enjoy analyzing their target markets, finding ways to create publicity for their endeavors, and designing and placing advertisements. Others hate it and wish there were no need for it. But love it or hate it, it’s important to remember the ultimate purpose of marketing: to make money.
A business wouldn’t be a business if it were not out to make money. Yet when it comes to marketing, many business owners forget this. They either do as little marketing as they can get away with, or they spend a lot of time on the marketing itself but little on the necessary research. In both cases, they’re probably not getting a very good return on their investment. In fact, they may even be losing money.
Tracking Your Marketing Results
The first step in determining whether your marketing is making you money is to track its results. This means finding out where paying customers are finding you. It may sound difficult, but there are ways to do it.
Tracking your customers is actually pretty easy if you’re doing business online. You can add tracking codes to your URLs to signify where each customer came from. Or you can create separate pages for each of your campaigns. Then you can simply view your web stats and see which customers came from where.
In the offline world, finding out how your customers found you can be a little trickier. You can always ask if you see them in person, but if you have other people serving customers for you, they may neglect to do so. You can also ask how customers found out about your business on mail order forms, but they may or may not answer. Still, it’s important to make the effort. If you ask every customer, you should get enough answers for it to be useful.
Crunching the Numbers
Once you have determined how much you’ve made from a campaign and how many customers you have versus how many prospects, you can start analyzing your data. The most important figure when determining how much money your marketing is bringing in is return on investment, or ROI. This is calculated by dividing your net profit by the amount of money you’ve spent on marketing. This will give you a percentage. If it is greater than 1, then you’re making money, and the higher the percentage, the better.
Another figure that is important to know is your conversion rate for each marketing campaign. This is figured by dividing the number of paying customers by the number of prospects. While this doesn’t give you a monetary figure, it is useful in determining whether a campaign is converting well enough to continue with it.
One of the biggest mistakes a business can make in marketing is not tracking its effectiveness. This can result in money wasted unnecessarily. Don’t leave your marketing to chance. Run the numbers and make sure it’s making you money.