This is probably the No. 1 question I hear from business owners. The money that you spend on advertising goes out the door and there’s seemingly no way to know what’s working (and what’s not working). Let’s be honest, sometimes you just buy an ad to get a salesperson off your back. Or because that’s what you’ve always done and it seems like it’s worked out so far.
The truth is there will always be some pieces of your marketing budget that will be hard to tie to new revenue. But a big portion of your budget should be easily traceable to leads and paying customers.
So how do you do that?
One key thing I do for all my consulting clients is to first establish a marketing budget. What are you spending on marketing currently? This includes everything from print advertising, to TV ads, to radio ads, to social media and event sponsorships. Is your logo on the back of a Little League jersey in town? If so, that’s on the marketing budget, too.
Once a marketing budget is established, the next key step is to start asking every lead how they heard about you. This means every person that calls your office is asked how they found your company. Google search? Bing search? Billboard? Word of mouth? That information is then recorded in a centralized place — preferably in CRM software, but a shared spreadsheet will do. Your website contact form should also require people to tell you how they heard about you. For my clients, I report monthly on this lead data. After just a few months, it starts to become quite clear what marketing efforts are producing leads and which ones aren’t. I’ve been able to help my clients make SUBSTANTIAL cuts to their marketing budget by simply tracking where leads come from. It’s not magic. It’s simply tracking where the money goes.
Of course, leads aren’t the full story. We want to know where the actual paying customers are hearing about you. That means we follow leads through the sales process and confirm in a centralized place (again CRM software or a shared spreadsheet) who converted and where they heard about you. This data is probably best reviewed every 6-12 months, depending on the volume of leads and customers your particular business has.
If your business doesn’t lend itself to quizzing customers on how they heard about you (maybe you’re a restaurant), you’ll have to get more creative. Email surveys are a great way to get data, but then you have to capture emails. I’ll save that topic for another newsletter.
Another key way to figure out what digital marketing efforts are working is to set up conversions in Google Analytics. If you have a website, you should have a Google Analytics account. And if you have a Google Analytics account, you should have Conversion tracking to show how people find your website (organic search, Google ads, email newsletters, etc.) and whether those people turn into leads or paying customers.
That’s a brief overview of how I approach the question of how well marketing is working. If you have any questions about this topic, please feel free to email me.