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Do you know how to measure your business? Is it possible that you’re throwing dollars at different marketing tactics simply hoping they pay off? If you are, you’re not alone. Many business owners struggle with understanding Return on Investment (ROI) when it comes to marketing.

With so many business owners today now responsible for their own marketing and sales (all while still having a business to run), it can be tough to figure out where to even start. Many business owners simply weren’t taught this stuff in school (not to mention this is also the case for a ton of ‘expert’ marketing companies), so, if you sometimes feel like you’re in the dark, you’re not to blame or alone.

Rule 1: Marketing is Math

Marketing may seem like it’s more of an art than a science, but, at the end of the day: it all boils down to what a good old-fashioned calculator reveals.

Unfortunately, there’s a whole gamut of businesses out there today that prey on small business owners who often are not well equipped to understand which marketing methods are truly effective: these businesses are selling marketing parlor tricks. Beware.

Businesses like these capitalize on how much marketing now needs to be done by business owners, and the lack of expertise many business owners have when it comes to marketing. Business owners end up paying for something in the ‘hope’ that it’s working.

The cold hard truth, however, is that marketing is math. Unless you know your numbers, you don’t know your business.

Don’t fret: not all hope is not lost. In this quick guide, we’ll show you the basics that will really get you on track.

Here’s a real-world example you’re probably familiar with…one of my clients –just this week– asked if they should renew their advertising contract with a local phone book company. My first instinct, as someone that sits and looks at numbers all day every day, was to simply ask how effective those ads have been for their business to date.

A relatively recent study has suggested that only 11% of all consumers turn to a phone book / ‘white pages’ when finding a local business, and even older demographics have become attuned to searching for local businesses online.

With this in mind, it can be tempting to make a knee-jerk reaction and immediately dismiss phone books, but as an ROI-driven marketing agency, we’d always rather base our decisions on actual data than an educated guess.

Rule 2: Know Thy Numbers (Analytics)

If you don’t know what you’re getting, how can you know you’re spending money on the right initiatives?

Based on the example above, how could this business determine whether their phonebook ads are effective and are delivering the ROI they want? What questions could they ask to help determine this?

In the case of this specific client, they had no idea because they don’t track them. They don’t know how many calls are originating from those ads, how many website visitors looked them up based on that ad, and they don’t know how many people walk in the door after learning about them from that ad.

Now consider the fact that they spend nearly $400/month for an annual contract for these ads…

Our point here isn’t to shame the business owner. If anything, maybe it’s to shame that advertising company. They should be working with the business owners to truly earn their trust and show them these data points to convince them it’s worth renewing their contract. Instead, they often resort to scare tactics…

Some voices may tell you any publicity is good publicity. As a small business owner, this is possibly one of the most toxic pieces of advice for your business. If it’s free, that’s one thing, but if you’re paying for it, you should reasonably expect to get your money back in terms of real customers and then some. Otherwise, it’s bad marketing – plain and simple.

Rule 3: Track Everything

So…what could this business owner do today to start figuring out if that contract is worth it and tracking the data?

Here at Wichita Designs, we recommend tracking phone numbers (which we offer at no cost in most cases) to uncover where phone calls originate. It can be confusing, but, essentially, these phone numbers are just tracking numbers that forward the call to your main line. For example, a postcard mailing campaign will have a unique number, a phonebook ad will have another unique number, and so on.

The tracking phone number just accepts a call, counts it, and then forwards it on to another number of your choice. We offer both toll-free numbers and local numbers for this purpose, and it’s part of our reporting at the end of each month. Often we’ll have different tracking phone numbers for everything a potential customer might touch, from phone book ads to postcards, to letters.

This helps attribute where a customer first heard about you, and as a result, you can then measure which forms of marketing are paying off. If you are getting a ton of calls from postcards, and zero from your phonebook ad, it becomes much easier to make a decision like this client had, right?

The opposite could also be true: perhaps you are spending a ton more money on postcards, but the calls are actually coming from the phone book. Unless you are actually tracking these data points, you are left to guess (and, possibly, to waste money).

Another option this client could have implemented would be to ask new visitors to their business how they heard about the business. For example, if you were a dentist, your new patient form could list this as a multiple-choice question on a new patient form, and simply let the customer show you the specific marketing channel they discovered you in. If you choose to do that, don’t forget to include “Referral” as one of your options (as so many clients today are obtained via word of mouth).

Rule 4: Do The Math

Ok, so you’re tracking everything, you know your numbers, now what?

Well, now comes the easy part!

Let’s plug those numbers into an easy formula we can use to determine whether your marketing is paying off, as a percentage.

Why a percentage you ask?

By figuring ROI as a percentage, it becomes much easier to compare apples to apples and to pit your various marketing attempts against one another, say SEO vs. SEM, or postcards vs. yellow page ads.

ROI = (Value of Investment – Cost of Investment) / Cost of Investment
Don’t worry – it’s not as hard as it looks. Let’s say your sales grew by $1000. This is the value of your investment.

Now, let’s say that because you now know your numbers and can actually attribute this to your phone book ad which you spent approx $100 on (your cost of investment), we can determine that you had an ROI of 900%. Now, this obviously isn’t all that realistic, but we’re more using round numbers to show just how easily this math can be done.

Rule 5: Don’t Trust Companies That Won’t Show You The Numbers (and explain them)

Every day, we hear horror stories of companies preying on customers who just don’t know any better. These horror stories are the entire reason we founded our business.

Why? We’d rather build relationships built on trust. We want to earn a customers trust month after month, vs. asking a client to sign a long-term contract.

What’s more, we find too many clients fall victim to marketing that sounds fancy and awesome, but it actually doesn’t do much in terms of moving the needle for a business.

Make sure your marketing company is providing some form of reporting that you actually understand, and if you don’t: don’t hesitate to ask them for a breakdown. Only when you are armed with reporting and numbers can you truly understand where your dollars are actually going. Otherwise, you’re just throwing darts in the dark.

At our agency, we make an effort to review data points with all of our clients on a regular basis, so they understand exactly what they are getting out of their money, what they should continue, or what they might want to do differently going forward. Our customers’ success is our success: as a referral-based company, the only way we can continue doing business is when our customers succeed and are well informed.

Struggling With Where to Start?

If you take away anything from this article, it should be this: track everything. For some clients, tracking these numbers isn’t always straight-forward. If you’re finding it difficult to know where to begin, give us a call.

We can help you get started tracking phone calls, tracking website visits, tracking postcards, tracking email opens and clicks, tracking customers that walk into your shop, and most importantly, tracking your sales. We’re also here to answer your questions: you don’t even need to be a client for some free advice.


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