How To Determine A Return On Marketing Investment
“Ugh.”
That was a direct quote from a client when I asked a simple question, “how is your marketing going?”
This post is as much an encouragement to marketing support service businesses as it is a call to action for business owners who are frustrated with trying to determine their return on marketing investment.
The barrier to entry is about the same for palm readers, business coaches (ahem), and marketing service providers...not very high.
Just about anybody can hang a shingle and call themselves a marketing agency. That loose availability does not mean there is no significant value to be found in a well-run service.
So how much should you spend as a marketing investment, and for goodness sake, how do you realize a return on your marketing investment?
First, let’s discuss how much to invest in the first place. Your planning and delivery of marketing in your business should be as intentional and well thought out as product development, product delivery, accounting, sales, and all other systems of the business.
Resources must be spent on marketing (the definition of marketing is not limited to advertising and promotion) with the same intentionality as resources spent on things like employee compensation, product and service delivery, and insurance coverage.
In conversation with a marketing agency owner, I asked, “how much should a small business invest into their marketing?” His response was, “it depends.”
He went to provide a range that I thought was very helpful.
Three percent of gross revenue (total income minus cost of goods sold) would be a low marketing spend, whereas twelve to thirteen percent of gross revenue would be an aggressive marketing spend.
The question then becomes, “what do we invest are marketing resources into?”
This is an important mind shift in understanding that marketing is not a cross-your-fingers, hope-for-the-best, haphazard shot in the dark.
Marketing is a system.
Just like the conglomeration of all of the bones in your body combine to form the skeletal system, and that system works in calculation and coordination, so all the conglomeration of promotional elements in your business work to form the marketing system.
I like to think of marketing in terms of channels or canals. You have the channel of social media, the channel of your website, the channel of live events, the channel of advertising, or the channel of say a podcast or YouTube.
Each channel provides a connection point for you to connect with your potential or actual client or customer.
The most overlooked, and yet perennially most effective form of marketing for just about every business on earth is quite old fashioned.
Word of mouth. Yes, word of mouth marketing is a channel, and is probably the most trafficked channel your business has.
There are three things you can do with your marketing system and the channels that combine to collectively share your mission with a targeted world.
First, map out the exact channels that should exist in your marketing system and turn a blind eye to the channels that are distractions.
All of your friends may be seeing great success with a certain social media platform. You might even hear a podcaster say, “you’ve got to be on Mashblot (a fictitious social media channel I just made up)!”
No, you don’t. You should invest in channels where your target client or customer is paying attention. If they are not looking at Mashblot, may be best to bypass and go to a channel that fits.
For some, you may not need to be on social media at all. We coach many contractors who are far better served to set up two lunches per week with vendors, general contractors, Architects, and Developers instead of trying to generate leads on Facebook, YouTube, or the platform du juor.
What channels are your clients paying attention to? Map it out.
Second, create a process to nurture and educate that channel. You can ask a simple question, “what is the end game?”
For your social media...what is the end game?
For your in person lunches...what is the end game?
For your website...what is the end game?
Our coaches spend a significant amount of time face to face with business owners. Over lunch or coffee, our end game is to coach! When a non-client reaches out to us to “learn more”, we try to spend less time talking about the features and benefits of our deliverables, and instead we actually coach them during that time.
It allows our client to get a feel for actual coaching and to evaluate their need for transformation.
That is our end game, coach well and allow the business owner to experience freedom directly.
For us, our website, social media channels, the My Business On Purpose podcast, and Live Events all exist to facilitate an in person or virtual meeting where we can coach in real life and understand the reality of a particular business owner.
Once you have your specific and finite channels, each channel must have a process all aimed towards an end game.
Thirdly, do the work and track.
Marketing is often characterized by a flowing group of artistic free-thinkers, and instead is both art and science. Certainly marketing requires ongoing creativity, that then gets packaged into a system for repetition.
Free thinking by design is not repetitious, and yet marketing demands consistency and repetition.
Business owners must know that in order to market well you must harness the ideation of free thinking, and then do the work.
For example, each one of our coaches writes one article per week between 500 and 800 words...every week.
Our coaches are not journalists, they are not career writers, they are business coaches. Yet the repetitious work of marketing requires content, and content requires writing.
Writing for our coaches is a time for each to reflect back on the questions and challenges their clients have faced the week prior and to simply answer those challenges. Just like I am doing in this post.
Once written we then turn that content into blog posts, LinkedIn articles, a podcast episode, a YouTube episode, and sometimes as a keynote at a live event. All that from one article.
When the channels are mapped, the processes are spelled out and the work is being produced, you can then do the important work of tracking your progress.
Each week we record metrics on a simple client spreadsheet where we track downloads, visitors, purchases, members, book sales, views, and other metrics that give us a picture of the progress within our marketing system.
Marketing has been billed of late more as the Vegas-style luck of inserting one dollar into a machine and getting two dollars out of the machine instead of the blending of art and science, free-thinking and repetition.
Marketing is a whole lot more than hoping to hit the jackpot on the simple pull of a lever, and it is worth you doing the work to uncover it.
Scott Beebe is the founder of Business On Purpose, author of Let Your Business Burn: Stop Putting Out Fires, Discover Purpose, And Build A Business That Matters. Scott also hosts The Business On Purpose Podcast and can be found at mybusinessonpurpose.com.
