Businesses - no matter the size - need to measure the effects of their marketing so they will know what is working and to discover what needs improvement. There are many areas for which marketing is responsible, and in each are indicators of performance that can be measured.
For smaller organizations, there are two key areas that I believe you must track:
• Customer acquisition
• Customer retention
Customer growth rate helps you measure acquisition, while customer longevity as well as frequency and recency of purchase are metrics of retention and customer value.
But before you can measure, you have to know a few facts. Who are your best customers? In each organization, the answer will be a little different. How do you define a "best" customer? Are they the ones who buy the most and cost the least to service? Are there other parameters that tell you they are "best?" Do they refer more business to you? Are they brand ambassadors?
How did you acquire them in the first place (special offers, referrals, newspaper ads, DM)? What is your customer growth rate/attrition rate? Which customers did you keep/lose? Why?
Then you need to define what the best ones look like demographically. Are they 35 - 45, married couples with children and a mortgage, or 18 - 24-year-old singles who live in condos? Urban or suburban? Readers or radio listeners?
Once you have a picture of them, it is easier to develop a strategic and tactical plan to acquire and retain more of them and fewer of the bad ones. Additionally, it becomes more apparent what you need to measure to ensure you are making headway and spending your marketing dollars correctly.
RESOURCES
• Marketing Metrics White Paper
• Marketing NPV, a website devoted to marketing measurement
For smaller organizations, there are two key areas that I believe you must track:
• Customer acquisition
• Customer retention
Customer growth rate helps you measure acquisition, while customer longevity as well as frequency and recency of purchase are metrics of retention and customer value.
But before you can measure, you have to know a few facts. Who are your best customers? In each organization, the answer will be a little different. How do you define a "best" customer? Are they the ones who buy the most and cost the least to service? Are there other parameters that tell you they are "best?" Do they refer more business to you? Are they brand ambassadors?
How did you acquire them in the first place (special offers, referrals, newspaper ads, DM)? What is your customer growth rate/attrition rate? Which customers did you keep/lose? Why?
Then you need to define what the best ones look like demographically. Are they 35 - 45, married couples with children and a mortgage, or 18 - 24-year-old singles who live in condos? Urban or suburban? Readers or radio listeners?
Once you have a picture of them, it is easier to develop a strategic and tactical plan to acquire and retain more of them and fewer of the bad ones. Additionally, it becomes more apparent what you need to measure to ensure you are making headway and spending your marketing dollars correctly.
RESOURCES
• Marketing Metrics White Paper
• Marketing NPV, a website devoted to marketing measurement
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By Harry Hoover
Harry Hoover is managing principal of Hoover ink PR. He has 26 years of experience in crafting and delivering bottom line messages that ensure success for serious businesses like Brent Dees Financial Planning, Focus Four, Levolor, New World Mortgage, North Carolina Tourism, TeamHeidi, Ty Boyd Executive Learning Systems, VELUX, Verbatim and Wicked Choppers.
