It used to surprise me when consulting business owners or executives to learn they do not track where their leads and sales are coming from. The first time it occurred I was incredulous. After encountering the same thing a number of times in other businesses, the surprise factor diminished.
The notion of NOT meticulously tracking such activity is typically outside the general awareness of a professional marketer. It would be similar to departing on an ocean journey by boat without using any method of navigation to get you where you want to go.
An even more direct question I ask when consulting is “What are you getting in exchange for your marketing dollars?”
If you are spending money for some kind of promotional activity, or along a variety of marketing channels and seeing sales go up, that’s good.
Even so, a more effective utilization of marketing expenditures would determine which marketing endeavors are yielding the greatest return and what can be done to maximize that further?
Further, even if you are not making money on a certain marketing channel, that does not mean that it cannot be made profitable – given a strategic approach using careful measurements and refinements.
Isolating Marketing Channels
Isolating the revenue of each marketing channel is vital towards increasing the profit from your marketing expenditures. (By the way, I have brought this to the attention of some clients and STILL observed they did not implement this – but that’s a different story).
Alternatively, I have interviewed a number of business owners and/or marketers who have “tried” PPC advertising (without actually knowing what they were doing), and after failing to yield a profit in a short time span, considered PPC unworkable.
Although PPC is not going to be profitable for every business model, I would argue that “trying” PPC out to see if it works, without a defined strategy of iterative, measurable testing to prove profitability, leads only to the inevitable result of losing money.
Stated another way, any marketing channel – even if unprofitable at first – will remain as an “unknown” marketing variable unless it were strategically tested through a process of repetitive refinements to accurately access its value towards increasing your bottom line.
In simple terms, if you have found a profitable marketing channel without testing, then that is a sure indication that it can be made more profitable with proper measurements, comparisons and refinements. And if you abandoned a marketing channel without adequate measurements and testing, then you’ll never know for sure if that channel might have resulted in an ongoing source of new business for you.
The point is that if you are not measuring the results of your marketing expenditures, how can you improve your marketing return on investment (ROI)?
Where Are Your Leads/Sales Coming From?
Certainly, the most basic fact to establish about every new client and sale, and indeed, every inquiry, is the answer to what prompted them to contact you in the first place?
♦ What is it an online ad? (Which one?)
♦ What is it some offline ad? (Which one?)
♦ What is a referral? (From where?)
♦ Did they read an article that prompted them to visit your website? (Which article and where was it published?)
♦ Did they find you by an online search? (Even if your business is primarily local, you should still find out if your local customers are finding you via the Internet.)
♦ Was your product or service reviewed on another website which inspired the searcher to contact you?
♦ Did they simply see your store or business while driving by?
Optimize Your Marketing Return on Investment
There are many more questions that could be asked, especially taking into account how your specific customers have found you in the past. But the first step towards refining and maximizing your marketing ROI is to determine what each marketing expenditure is generating for your business, in terms of sales and profit.