Analyzing Your Company’s Marketing ROI – 5 Problems Revealed
Recently a few of us at our firm set out to develop a sophisticated marketing business intelligence module with our partner company Taurus Software. In order to do this we decided we would meet with as many multi channel companies from $10 million in sales to $100 million in sales as possible, as well as other industry experts. We found many surprising facts during this process.
1. We found a sheer number of companies that do not accurately use source codes and offers in a consistent and disciplined manner for all electronic media types including banner ads, natural search, paid search, shopping comparison sites etc. Without this, a meaningful ROI cannot be performed.
2. Companies did not accurately measure the true cost of the marketing initiatives by media type and since most didn’t use unique source codes they weren’t able to measure which media type and source code out performed others.
3. Marketing initiatives often compared gross margin earned to the marketing expenses, but very few allocated the cost of acquiring and processing those transactions to truly look at the net contribution to profit. One example of this is the percentages paid to affiliate marketing initiatives and not taking in to account the operation or general and administrative expenses to understand at what point an initiative is not profitable.
4. Most companies did not set goals for determining how individual media types should be measured to determine which was a success and which were failures. The stronger companies set goals for gross dollars generated per marketing dollar spent and aimed for at least a 3.5 to 1 for instance. If this type of goal wasn’t met the initiative was cut and the dollars were funneled towards other tests or successful initiatives.
5. Companies did not often accurately analyze what initiatives drove new customer acquisition versus customer loyalty and retention. We found that numerous companies could not truly say what initiatives drove these customers, and whether or not these new customers would become long term profitable customers based on the source of the transaction.
Can you relate to any of the five problems above – are they still problems for your company? In order to accurately measure the effectiveness and ROI of your marketing initiatives, both printed and electronic, it is imperative that you develop a well disciplined, consistent approach to setting up and measuring your company’s marketing initiatives.
If you are in need of revamping your marketing strategies and understanding how to be more efficient and profitable with your marketing spend, then call us and let us give you a hand. We would be pleased to assist you with this process.
Brian Barry is a Senior Consultant with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.
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