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Measuring the Impact of Marketing Programs

Measuring the impact of marketing programs is critical to making the most of advertising investment dollars. Without understanding the return on investment (ROI) of marketing programs, critical resources can be misdirected and poorly utilized. To this end, measurement capabilities must be built into the program at the point it’s established. The question ‘How do I know if it’s working?’ should be answered definitively. And if multiple marketing programs are employed the ability to differentiate between their impact must be established before they’re implemented as well. Furthermore, marketing objectives are different when focused on customer acquisition versus customer retention therefore measurement of their effectiveness will be based on different parameters.

Marketing for Customer Retention

Measuring the effects of customer retention marketing can be tricky because there are factors other than marketing that affect a customer’s decision on whether or not to continue to do business with a service provider. So to separate the marketing impact from the impact of the service provided the measure will need to focus on what brought the customer in for service. The key question is ‘Does the customer come in more frequently due to marketing?’ If the answer is yes then the marketing program is having an impact. Assuming that the customer would have remained a customer because they’re happy with the service then the impact of marketing to existing customers should be measured primarily in the frequency of visits. If there is data to support this measurement from before the marketing program it can be compared to the frequency of visits after the marketing program was put into effect to achieve the desired measurement. The profit increase measured against the cost of the marketing program will give the ROI. Once the benchmark level has been established ongoing marketing efforts should continue to produce similar results over time. Frequency of visits should hold the level achieved through the marketing program.

Marketing for Customer Acquisition

Marketing for customer acquisition focuses on attracting new business. Exposure increases awareness. People will have their vehicle serviced when they decide it is needed so they may need to be made aware of the services available many times before they’re at the buying stage. So from the time a marketing program is initiated, a prospective customer may not need service for several months. For this reason measuring the impact of customer acquisition marketing directly may be too cumbersome.  Looking at the measurement on a month by month basis is probably the most practical even though the customers gained during a given month will most likely not be influenced by the marketing effects of the same month. So the simplest measurement is to look at the profit gained during a month to the cost of the program during that month to determine ROI. If the ROI is high enough then the marketing program is effective.

Evaluating the Measurements

It’s important to remember when evaluating marketing programs that while measurement of effectiveness is critical it also has a cost associated with it. So gathering the information to be used in the analysis should happen as a natural part of the sales process. Also the reporting of the information should not be time consuming or overly complicated. The method of measurement should be established before the program is initiated and be continuously monitored. If the ROI is positive then the marketing program is working.

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