Have you ever seen those two words used together? How about creative and math? Right brain and left brain?
Marketing is the process of communicating the value of a product or service to customers and a calculator (of course) is a device used to perform both basic and complex operations of arithmetic. My 3rd grade math teacher and my 3rd grade art teacher…ok, I’ll stop there.
To the point: Marketing should be measured. How do you measure creative? Trick question--you can’t, which is why you should never expect to see maximum ROI from a traditional creative-focused agency with a funky name that uses your budget for art experiments. Most small to medium businesses can't afford the luxury of wasteful spending. The popular marketing joke is that “half of my marketing isn’t working, I just don’t know which half.” But if you can’t see a ROI on your marketing spend, or dare I introduce another crazy concept, cannot see your ROMI (return on marketing investment), then it’s not very funny. Creative is very important, but it needs to be reigned in by as many measurable data metrics as possible.
In my opinion, marketing should be a to performer of a profit and loss statement (up with the revenue drivers), not just an expense at the bottom that cannot be tied to revenue. The fact is, 80% of CEOs “don’t trust” marketers’ work. So, how do we get CEOs to trust marketing? Simple: with numbers…after all, if it cannot be measured, it cannot be managed, right?
But, just because you can measure something relate to marketing, doesn’t mean you should. Who took the “key” out of “key performance indicator!”
How it Works & Where to Get it
This is the calculation in the Marketing Calculator we use for our clients. Not only does it help identify their goals, it helps identify the targets we need to meet as an agency overcome our bill and provide real profit. We're transparant about that from day one. I love bringing a calculator to a marketing meeting…it goes well next to my crayons.
Follow the steps below (see figure 1)
How much new revenue do you want to generate from Online Marketing?
What Percentage of this revenue do you need to book from Online Marketing as opposed to other sources of leads & new customers?
What's your average revenue per new customer or new account?
Calculate number of monthly leads needed to support new customer goal. (One tip: take the total revenue last year divided by the total clients you serviced)
Calculate monthly traffic needed to generate required number of leads
The primary KPIs are visitor-to-lead and lead-to-customer percentages. Most all other numbers become noise inside of the C-suite (Chief Executives). These two numbers should be managed with a well-executed online marketing strategy along with target goals.
What’s the corresponding sales strategy to impact the lead-to-customer conversion rates? Are sales and marketing technology integrated with technology and business development? For example, is your website integrated with your customer relationship management (CRM) software? Google Analytics is not good enough to measure accurately these KPIs and will not provide the level of marketing intelligence necessary to drive important decisions at all levels of the management team.
Return on marketing investment is possible with the right tools and the right strategy executed by experts who understand both. Mojo doesn't just tell you which half of your marketing is working, or ensure you're getting as much as possible from the digital half—we help your business make as many smart decisions as possible. Our goal is to make you look good, no matter your position.