Test & Measure for profitable marketing

Test & Measure your marketing

It always astonishes me how business owners will spend money on an advert and don’t know if it’s generating a profit. I saw a great job advert last year seeking a Marketing Manager. Written by the business owner, the advert read “Job description : For every £1 I give you, you’ll generate at least £2 of profit.”. That was literally the whole job specification! The reason I love it is because that encapsulates the financial purpose of successful marketing – you invest and expect a higher return. The key is to Test & Measure your marketing strategies to ensure they’re generating a profit.

Make your marketing an investment, not a cost

It’s common in marketing and business generally to speak of R.O.I (Return On Investment). If you spend £100 on marketing and it generates £200 of profit from the resulting sales, that’s an ROI ratio of 2:1 or 200%. As long as your ROI is greater than 1:1 you’re on the right track. Do you know the ROI on all your marketing investments? You’ll want to. Whenever you start a marketing activity, put in place a procedure to measure the results.

As an example, imagine you decide to try a small advert in your local paper and it costs £100. Ensure that you and anyone else answering your phone, dealing with customers asks “Where did you hear about us?”. And at the same time, keep track of how much the customer spends. Assuming your advert resulted in 10 sales of £20 each, you got £200 of sales for your £100 investment. But before you celebrate too quickly, what’s your profit margin?

Calculate ROI with Test & Measure

If it’s 50% you spent £100 to make £100. You wouldn’t want to keep doing that! So next week change the advert – a better headline, better call to action, and place the improved advert. The second week with your improved advert you get 20 sales so you’re winning with £200 profit for £100 spent. Now you can celebrate. You tested an advert, measured the result, tested a possible improvement, measured again, and saw better results. That’s usually how it goes… but not always. If the results had been worse the second week, you’d know that what you tried was a bad idea and the next week try something different.

Keep testing and measuring to see what works and keep improving your results. I often see business owners just doing the same old thing, over and over, never knowing if it’s working OR if it’s the best ROI. Use test & measure to try different advert designs, different offers. But also use it to test between different advertising media – different newspapers of course, but also internet advertising, social media, LinkedIn, Google Adwords, and so on.

Stop spending on marketing that isn’t working. Test and Measure all the time and ensure that your marketing investment is delivering the best possible return. If you’re unsure if something is working – it probably isn’t! Change one strategy at a time so that you can more easily see the results. Every quarter review your ROI and kill the two worst strategies and add two new ones – in a small way – while you test and measure them.