Metrics should drive your marketing strategyPosted on
As a business owner today, you need a clear and concise perspective on offline and online media, interactive and interaction tools, and the latest communications trends and emerging technologies.
Also, you must back your choices with measurable results. Today, in addition to results, tracking, return on investment, accountability and marketing automation are prerequisites for any marketer.
The media you select need to be media your customer will use. Placing ads, running an e-mail effort and having a blog does not mean that you have a successful media effort. What will turn your marketing effort into a profit center will be the response rates the conversion to sales that will only occur when you have media that is customer-centric.
Recent data indicate that the marine market, like many other consumer and business-to-business markets, has developed into a series of highly specialized demographic-driven segments. Even the Internet is now being called the splinternet.
In the past, it was understood that power and sail ate from two plates. Today, demographic and psychographic segmentation has increased to a point that not only the type of boat used but also the size of the boat, use of the boat and region where it is used are defining points and are marketing demographics that need to be employed.
What do these new data have to do with us as marine marketers? Well, they should make us all realize that marketing plans that focus only on offline or online media will not provide the sales base needed to survive.
Knowing your market is vital, but as your grade-school teacher told you time and time again, know your numbers as well. Knowing your market is not worth much if you dont know your numbers.
Numbers have evolved from measuring results to driving the success of a business profit/loss, cost/ benefit, the bottom line and perhaps the most important of all: return on investment, or ROI. In fact, perhaps the three most important letters in the marketing world today are ROI, closely followed by the total cost of ownership.
Knowing your market will provide you with a great start to improving your sell, but understanding the ROI drivers within your target market is the true golden goose.
Know your numbers
Here is an example of determining a programs ROI before the program is even developed. Lets call it projected ROI, or PROI. PROI is also known as reverse return on investment, or RROI.
Program: New business generation
Vertical: Medical manufacturing
Estimated program cost: $175,000 (cross-media)
Traditional response rates to this type of program within this segment have run about 1.1 percent, and this rate includes all media used. Through the use of cross-media, or integrated marketing, we can safely raise the estimated response rate to 3.5 percent.
Based on an average sale of $75,000 with a profit rate of 35 percent, or $26,250, the program would need to achieve 6.6 sales to break even.
Even with a reduced profit percentage say 15 percent, not 35 percent and extending the effort over the sales cycle of the program (which can be about three to 18 months, depending on the market/industry), you can see that the justification to move forward with this campaign is strong and well-presented.
In short, marketing is a profit center.
Actual program results:
Final program cost: $187,500
Response rate: 3.75 percent, or 562 leads
Conversion of leads to meetings: 49*
Sales after three months: 5
Sales after six months: 4
Sales after eight months: 2
Total sales: 11
Average value of sale: $135,750
Actual ROI $530,000-plus
*within a six-month period. During the eight-month sales cycle, there were actually 62 face-to-face sales meetings.
More than name, address
Today, demographic and psychographic segmentation has increased to a point that the seller must capture more than the name and address. You need to capture lifestyle, buying cycle, marketing pain points and potential marketing demographics using a variety of media. It does not matter whether you are a B2B or B2C marketing support firm. Data drive the program, and you must control and maintain the data. ROI can sell the effort.
What do these new data have to do with marketers? Well, they should make us all realize that marketing plans that focus only on single-tier media will not provide the sales base needed to survive. Additional complexity is added to the marketing formula when one looks to regional and use patterns of your newly targeted new segments.
A marketer needs to address the segments and, using the latest in digital print technology linked with leading media outlets (magazines and traditional offline media), must provide a cross-media and multidimensional marketing strategy. Personalization, versioning and database management, along with Web 2.0+ technology (social network marketing, mobile marketing are coming of age), must be considered in any marketing plan, not only to generate viable and active leads, but also to reduce marketing cost while increasing the ROI.
Aggressive programs tied to existing customers (vertical, horizontal, upselling or add-on purchasing) must become part of the mix. Past program results and responses need to be data-mined and surveyed to determine whether they hold future potential sales.
The marketer must build a valid business case that provides the lowest cost per lead, linked to an after-lead program designed to convert that lead into a sale and an after-sales effort to keep that customer happy.
Each marketing effort needs to start with the acronym RIIMR.
What is the relevance of the offer to the client?
How will the program be integrated with my other marketing spending?
How can the customer interact with us, start a dialogue?
Can I measure the success of the program?
What was the ROI of the effort?
Dont cut; change strategy
During times of severe financial stress, reduction of a marketing budget is the common response. What is needed is a shift from high-cost unproven or low-response media to targeted and focused programs that measure results online and immediately determine the success or failure of a program. Cost per thousand impressions, or CPM, may have left the room, with ROI standing strongly on stage.
The need to examine data in real time, say, prior to a show or just after one, can only be handled effectively online, linked to your website and to your sales, dealer or distribution network.
An old adage is that a firm that maintains or increases its marketing budget during an economic downturn will increase its market share; research has proved this to be correct. Versioning, variable data printing and personalization linked to an aggressive marketing effort are proven tools in the sales of high-end or luxury items. Traditional direct-mail results are less than 1 percent, yet personalized direct mailings linked to a website are sailing in at 4.5 percent and higher.
Its simple: The more you personalize, the higher the response.
Cutting the marketing budget may be the knee-jerk response, but the money spent down the line to rebuild the market-share loss (some say you can never gain the market back) will, in many cases, add more to your market spending without adding to the lead-to-conversion factor.
The smart money goes with a plan to allocate marketing dollars with a business case and a plan in hand. No one wishes to waste money. It is so hard to come by, but today one must measure the cost against the return and start the plan with a profit-generating response rate in hand.
Thaddeus B. Kubis is a marketing and advertising authority specializing in emerging marketing technologies. He is also well-versed in personalization marketing, mobile marketing, branded content, one-to-one marketing and interaction marketing. A board member at Marine Marketing Association, Kubis is also a certified sailing instructor.
This article originally appeared in the September 2011 issue.