It’s a business irony that Direct Response marketing has the most unlikely ally-The CFO/CPA! How’s that?
Direct Response = Measurable Tangible Results
One of the key principals of direct response marketing is that it’s measurable. Just like the Key Performance Indicators so beloved by the CFO and CPAs of the business world, direct response marketing produces measurable results.
Direct response marketing is selling in print and in every other type of media you can think of. At the end of the business day, week, month, quarter or year, the sales numbers are calculated to the penny. In fact, the sale’s staffers are the only employees whose performance is not based on any subjective or convoluted formula for performance. They’re rated on results.
“How much did you sell today?” That objective number is now held up to the measuring stick of the sales quota. Are today’s sales under, at or over the quota? Each person on the sale’s staff tasked with driving revenue answers to the hard set of numbers he or she has generated. If only every Key Performance Indicator in a business was so easy to determine and interpret.
Measure your marketing as accurately as your sales staff
There are a lot of business people who are marketing their products and services with no real picture of how effective any or all of the campaigns are. Some stuff works, some stuff doesn’t and you end up like PT Barnum who once said, “I know half of the advertising on my circus is wasted, but I can never figure out what half.” The key to knowing what’s working and what needs to be tested and fixed is being able to measure the results of your marketing.
First, your best and most accurate measure is the results-the sales generated by any campaign you undertake. It’s not that the interim measurements of a marketing campaign are not important, but those are not figures you can take to the bank. Dollars, the numbers that keep you in business and determine the quality of your business life.
Some basic examples of interim numbers in a direct marketing campaign are:
· Traffic driven to your web site
· Response percentage on all ads
· Number of quality leads
· The number of sales appointments
All those numbers have their place in your marketing planning and evaluation (lessons for another day). The number you want is the Return on Investment of every marketing campaign you undertake. Again, you have to separate each campaign and set up a system to track the results (another tip for another day). Now, to keep things simple there’s no goal to take a loss at this time. Here’s the basic math:
A. Total cost to run the campaign
B. Total dollars in sales that campaign generates
Now the Measures
1. If A is greater that B that campaign lost money. Stop it. Fix it.
2. If B is greater than A. Great, keep going as long as it’s making money.
3. Determine ratios. Example: Say White Auto Repair runs a ValPac or SuperCoups ad that costs $400.00. After all is said and done (even after the coupon discounts) Greg makes $1200.00 in sales. Expressed as a ratio, for every $1.00 dollar spent, Greg made $3.00, 3:1 or 300% return on investment.
The final caveat: All direct marketing campaigns start with a goal to make money. Not for exposure, not for image, not to create brand awareness. In fact the direct marketer believes those are by products of direct response marketing.
Here are some practical ideas to make marketing measurement work for you:
1. Immediately stop any advertising that you cannot measure the results from. That means an end to most of your image and brand advertising.
2. Put in a system for measuring and tracking the results of each marketing campaign. If you need help call in a reputable consultant.
3. Going forward all your ads need an offer your prospects can respond to and move into your sales cycle.
4. Be ruthless about achieving a positive Return on Investment on all your marketing initiatives. Even better set an ROI goal as part of your marketing planning process. You give your sales people quotas; don’t treat your selling in print any differently.
The key to direct response advertising is measurable results. The ultimate result is dollars being put into your business bank accounts. Nothing else is going to keep you in business very long.