How to measure marketing spend

If you’ve cut back on those unnecessary costs but you aren’t going to market and staying front of mind then you are likely to suffer the worst brand repercussions of a downturn: loss of market share and an irreparable dip in awareness. As was said long ago, a business exists only when someone sells something – and profitably.

But where best to spend your marketing budget? Marketing activity has never been more accountable. So, while you should ensure you keep talking to existing and prospective customers, you should also ensure that those conversations generate a return and are using each communications channel cost-effectively.

But how do you interrogate your marketing activity to ensure that? The number of channels used to talk to consumers has multiplied, so how do you compare them and find common benchmarks? How do your use these measurements to justify expenditure on talking to the relevant customer segments? Here at the Indicia Group, we have developed five separate layers of marketing and media measurement that should be applied to every marketing channel. Cost per contactCost is possibly the most straightforward measure. All you are measuring is how much it costs you to contact each individual customer through that channel – so through digital activity, telemarketing, direct marketing, press advertising etc. How much does each contact cost you? If you are launching an advertising campaign, how many people will see it and at what cost?

Relative performance versus competition This is where you evaluate your brand in the context of the market. How does your brand compare to competitors? Is their share of the market growing as a result of their marketing activity? You must have a good understanding of how your competitors are reaching customers, how effective that is, and how it compares to your progress. This allows you to see if the sales growth is coming from market growth or if you are taking share from your competitors.

Marketing performance related to salesThis layer of measurement should incorporate sales performance for each campaign and media channel. If you’re running a series of new business events, launching some regional press ads and also sending out email alerts, which activity is impacting on sales?

Attitudinal changeHas the activity changed the way prospects or existing customers think about your brand? Has it helped drive awareness of crucial brand values? This measure helps you see the story beneath the hard sales figures and understand how your brand is perceived. Here you can see the subtle differences between what a spreadsheet will tell you and what your customers actually think and feel.

Customer valueFinally, measuring customer value means you can understand the difference between a consumer who picks up your product because it is on offer and one that’s actually loyal to the brand and will pay full price. It also allows you to take factors such as customer satisfaction into account, which is a forward-looking measure of future purchase intentions. This is different to sales, which is reflection of activity that has happened.

There are two classic mistakes when it comes to marketing in a downturn. One is not marketing, full stop. And the other is marketing without an understanding of how effective it is. Businesses can put in place some simple steps to ensure they understand how hard every penny of marketing expenditure works. This is about spending on marketing effectively and more efficiently. It’s about delivering measureable results. And that’s something all businesses need – both in recession, and beyond, when the economy recovers.

*David Perkins is the CEO of Indicia Group.Related articlesFirm pursues bold ‘name your price’ strategyMichael Jackson: marketing geniusMarketing in action

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