Quantifying Marketing Efforts

When putting effort into something, be it a project or task, whether big or small, we hope to believe it will turn out as successful as the amount of effort we put into it. Doing one’s best would, ideally, reap the best results, while on the other hand, doing the bare minimum would make whatever is being worked on, flop. But that is not the case in marketing. Sometimes, companies will invest a lot into marketing, and not receive the results they anticipated. This is where the measuring of marketing effectiveness comes in. Marketing effectiveness is measured by the amount of profit made by campaigning both long-term and short-term, and how the cost of gaining customers is lowered during the said campaign. By looking at this comparison, it will be clear that perhaps, doing a lot of investing is not the best move, but rather, investing in what is relevant to the business, is.

Without measuring marketing efforts, there is a risk of making costly mistakes. To avoid this, developing a marketing strategy and consistent plan will be a great help in monitoring campaigns by projecting, measuring, and evaluating them. These strategies and plans should include qualitative goals, revolving around the customer’s perception of the product or service and how they rank compared to the competitor’s. And quantitative goals, which are all about the amount generated in, for example, leads or units sold. With this established, the next step would be to budget and decide how much will be invested to achieve these goals.

To measure a company’s overall long-term performance, KPIs, key performance indicators, are used, and the best out of the many of them, is a return on investment (ROI). This is a great method of measuring the effectiveness of all campaigns as it also takes into account the leads generated from the campaign. ROI measures the sales revenue a campaign brings on all the money spent. Using the same example provided by Intechnic, if John invests $1000 in a campaign that brings back $5000 in sales revenue, then the ROI is $4000. Other metrics that can be used are the cost per sale and the cost per lead. Cost per sale gauges the expense of each sale, which is valuable because it compares campaigns to each other. Cost per lead mostly concerns itself with the leads the campaigns make, so it measures the cost-effectiveness of these campaigns. The only negative of this metric is that it only focuses on the leads generated and not the quality of them. Using the formula: average sale per customer X average number of times a customer buys per year X average retention time in years for a typical customer will produce the customer lifetime value for the company. Calculating the customer lifetime value (CLV) will show which marketing efforts attract the ideal customers.

Those are just a few examples of quantifying marketing efforts whose data will help make the changes necessary to be on the way to a business prospering. Going into marketing with a plan, rather than the intention of investing a lot in hopes of receiving a lot, is more productive. Taking advantage of the data produced by KPI will be the guide, or even a recipe, to investing just enough, to get the desired results.   

Sources 

“How to Measure Marketing Effectiveness.” New Perspective, 24 Jan. 2022, https://www.npws.net/blog/measure-marketing-effectiveness-setting-goals/#:~:text=Marketing%20effectiveness%20is%20measured%20by,are%20lowered%20during%20that%20campaign.

Lake, Laura. “How to Measure Your Marketing Efforts.” The Balance Small Business, The Balance Small Business, 9 Dec. 2018, https://www.thebalancesmb.com/how-to-measure-your-marketing-efforts-2295830.

Kucheriavy, Andrew. “Marketing Effectiveness - How to Measure Your Marketing Success.” Intechnic, Intechnic, 11 Sept. 2017, https://www.intechnic.com/blog/marketing-effectiveness-how-to-measure-your-marketing-success/.

Twin, Alexandra. “What Are Kpis?” Investopedia, Investopedia, 17 Aug. 2022, https://www.investopedia.com/terms/k/kpi.asp.