Guest Blog by Michelle Quickfall – Freelance Marketing Consultant
We know when our clients decide to invest their hard earned money, they usually wish to understand ‘What return will I get?’ and investing in your business is no different. However, the fundamental question can sometimes be lost in business, marketing or accounting jargon and as a business owner you can be left feeling conflicted by the knowledge that you know you need to invest, but are unsure where to start. Perhaps you have spent money marketing your business but have no idea if the investment has worked or not and understand your marketing metrics.
Let’s start with defining 3 key bits of jargon which are important if you are spending money on marketing your business.
Metrics – a set of numbers that give information about a particular process or activity.
Return on marketing investment (ROMI) – the profit from a particular activity compared with the amount spent on marketing it in a particular period. This shows how effectively the company is in spending money on marketing.
Key Performance Indicators (KPI)– abbreviation for key performance indicator: a way of measuring a company’s progress towards the goals it is trying to achieve.
(Definition of “metrics” , “return on marketing investment” and “KPI” from the Cambridge Business English Dictionary © Cambridge University Press)
There are a multitude of books, papers, blogs & experts relating to these weighty topics so, in this blog we just want call out some useful pointers to help your understanding of the principles and the relevance to running your business. There is also much spoken about the power of digital marketing and its ability to provide business owners with lots of data about their customers, which is true but must be caveated by the assumption that the business owner has clearly defined goals and objectives for their digital activity.
The pointers are split into 5 areas, which should give you a clearer view of how marketing metrics can enhance your business knowledge, planning and also demonstrate why monitoring & review are critical components of understanding any marketing investment you make.
1. Define your key business metrics and review them frequently
The start point is to define the metrics & KPI’s which are important to your business and define how you are going to measure them. These can vary greatly, for example a new business could need to build awareness whereas a more established company or brand could need to build recognition. You then need to allocate a process and time to review your defined metrics and KPI’s regularly. Consider allocating some marketing budget towards outsourcing monitoring if you think you will not have time to do it yourself, as it should be a business priority.
2. Understand the wider implications
There is a fine balance between keeping your defined elements to measure simple and making them smart enough to connect with your business goals so that they provide valuable and appropriate business insights. Thinking beyond the usual sales and profit indicators into areas such as customer satisfaction.
3. Beware of digital metric confusion
Another area which can seem intimidating is how to use the data you are seeing to make it meaningful. Getting plenty of views or visits may seem like a good thing but engagement through likes, shares and comments are more powerful metrics to be monitoring. The difference could be thought about in terms of attracting attention versus bringing in customers. Understanding which of the metrics influence your business is key to being able to focus on only monitoring what is relevant and achieves your objectives.
4. Understand the theory but make the practice realistic for your business
Having the confidence to invest in marketing your business because you understand the return is fundamental and using an ROMI calculation can produce a number to benchmark against. However, it is not an exact science as each business has it’s own goals and objectives driven by a multitude of factors such as the type industry, how long the company has been in business, external market influences, the competitive context and even the personal values of the business owner. Therefore create additional KPI’s which are more reflective of your business eg: if your business goal is to build loyalty amongst your existing customer base then a customer satisfaction metric is imperative.
5. Review and React
Finally, having invested time and energy in defining your business and marketing metrics you then need to monitor and review them. You will absolutely learn as you go and want to refine and adapt your definitions and priorities as your business grows and develops. The vast amount of data available and monitoring possibilities provides an exciting prospect for small business owners and a small amount of thought and preparation to your approach should help you demonstrate your business performance and give you confidence to make quick business decisions for the future.
This topic can feel daunting even if you have some marketing experience and is worthy of seeking external expertise to make sure your business plan and marketing activity is planned to be easily monitored and effective at achieving your business goals. If you are interested in learning more and how it can be applied to your business then please CLICK HERE to get in touch and arrange your FREE 60-minute consultation.