Measuring Marketing

measuring marketing

InTheMiddleMediumThere are hundreds of books about measuring marketing.  This post covers none of them.  I’ll build on my earlier post about marketing ready mix by providing simple guidelines on measuring a marketing campaign.  Most producers, even the large ones, don’t have marketing departments.  This post is for those people who have been asked to head up marketing and aren’t sure where to begin.

Creating a campaign and measuring its effectiveness may become a chicken-or-egg problem. Which comes first? Considering this, it may be helpful to track marketing ideas alongside your ability to measure those ideas.

Your marketing campaigns are living experiments.

Keeping your marketing experiments cost effective must be an affordable, easily measured effort.  You’ll have to keep the marketing ideas and the measuring marketing ideas together. If you focus too much on one and forget the other you’ll end up out of balance.

Never forget, if you aren’t able to measure your marketing campaign to show the bottom line impact, your efforts will be short lived.

There are basics of measuring marketing just as there are basics to differentiation. The basics of measuring marketing flow along a process: define, measure, baseline, monitor, iterate, abandon or develop.

To keep things simple, we’ll build on examples from the marketing ready mix post. We need to decide how to differentiate our company.  We have three choices: Quality, Service, or Price.  We don’t lead in any of the three.

Quality, Service or Price?

We have three choices when it comes to cement suppliers.

Cement Company A is vertically integrated with the current ready mix Price leader.  Cement Company B is closely tied to another ready mix competitor who leads in Quality.  Cement Company C has low quality cement that requires constant changes to mix designs because of issues with air.

Our owners refuse to buy from Cement Co A or Cement Co B because they view those purchases as giving money to our competition.  Subsequently, our supplier is Cement Co C.

Our Problem

Within our market, we have a ready mix supplier that leads Price, another who leads Quality and no clear leader of Service.  We know we can’t take the lead spot in Price because of the vertically integrated supplier.  We also know it will be more difficult and costly to try to take the lead spot in Quality.  Our only choice is to become the clear leader in Service.

How to Begin

Our marketing campaign to become the number one supplier in Service will be a tough battle.  Inside the company, below the management level, morale is low.  It’s kind of always been that way and we accept it.  Outside of the company, with our customers, most of them use us when they have to because of proximity to a job or because the other companies are booked when they need mud.

How do we become the top Service provider?  Slowly, methodically and with purpose.  Our marketing efforts will begin inside the company then move to our customers.  We must begin with building up our staff before we can have a positive impact on our customers.  Always begin marketing inside the company while realizing the long-term goal is to improve our reputation outside of the company…to our customers.

Creating a campaign and measuring marketing

Define

You must know what you want to accomplish before you can measure anything.

We want to be the Service leader for our market. Great.  What does that mean?

On time deliveries? Friendly credit managers? Honest dispatchers? Yes to all of those things. But there is always more.

Every interaction a customer has with us should leave a good impression. Anyone in the office or at a plant should be able to answer the phone and speak with a customer or vendor in a friendly, professional manner. Our staff should have ownership of issues and must follow up. Imagine providing one number for customers to call and making this number easily found everywhere (e.g., on invoices, submittals, trucks, website, etc.).  What if we lowered our DSO?

Is lowering DSO actually a marketing issue?  Yes.  It requires a goal that impacts customers and requires multiple departments (sales, dispatch and A/R) to work together.

Measure

Review the definition of the things we want to measure and drop them into categories: easy to measure, difficult to measure, unmeasurable. We’ll build momentum by implementing the easy to measure items.

Easy to measure: length of phone calls, credits & re-bills, complaints, number of places phone number appears
Difficult to measure: on time deliveries
Unmeasurable: friendliness of staff, honesty of dispatchers

Baseline

Determine a numeric point of reference for each of the easy to measure items.

For instance, if you have a somewhat modern phone system you can pull average call length and number of calls. Do this over whatever time period your phone system will allow.

Your controller should be able to tell you the monthly average and year-to-date total for credits (CRs) and re-bills (RBs) along with a rough calculation on how this has impacted your DSO and cash flow.

Find all places where your company information is printed and count how many of those include the same phone number.  Check your website, invoice stock, ticket stock, letterhead, advertisements, sponsorships, plant signage, trucks, and every other place you show your company information.  How many of these include a phone number?  How many different phone numbers are there?

Regarding the bottom line impact, you should be able to lower your employee turnover which lowers your long-term costs.  This will be a softer measure than the impact of a lower DSO.  In all of the measurements you attempt, please include your controller, who is the critical part of calculating the monetary value for each of your measures.

Data

Set the intervals for data collection and calculation.

Some of your systems will have natural rhythms for measuring.  Think accounting.  You’ll follow your accounting periods to measure CRs & RBs.  With other systems, where no natural rhythm exists, you’ll have to select arbitrary measurement intervals.  Generally, a weekly sampling rolled into monthly averages and YTD totals will suffice.

Monitor

Watch the data over time and look into trends and exceptions.  Of course, this means you’ve defined your exceptions.

On trending…in our case we inherently know we want CRs & RBs to decrease.  This will improve our relationship with our customers in the form of credibility and it will improve our cash-flow.

On phone calls, you need to rely on your dispatchers, credit managers, and other phone-intense staff to determine the length of a normal phone call.  Validate the guesses with the actual data.  Calculate the cost of the phone calls (cost per minute) and then see how much time is being spent on resolving issues.  Add in the cost for actually resolving issues by tracing where the issues lead and the man hours to handle them.  From this you’ll have better insight to your service and the related cost for providing poor service.

What about exceptions?
With exceptions, the goal isn’t to explain them away but to understand why they occur and if action should be taken.  Do the exceptions go against our goal of becoming the Service leader?  Do the exceptions have a significant cost?  If you answer yes to either then you must manage the exception.  If you answer no to both of the questions you can ignore the exception.

Iterate

Try again and again and again.

Fine tune each of the above steps as your work through a campaign.  Improve how you approach the steps as you develop new campaigns.  Build on your successes.  Investigate your failures.  Continuously learn.

Abandon or Develop

Be mindful of your results from the iteration as you test the various parts of a campaign or as you deploy a new campaign.  Just as you do with iterations, if something is working keep developing on that idea.  If something is failing then abandon it.  Let a few weeks – or even months – pass before you investigate why an effort failed.  You’ll learn at least as much from your failures as you will your successes.

Final Thoughts

Some companies are overwhelmed about marketing.  It’s uncomfortable and outside of the area of expertise.  There are several industry consultants who can help you with your efforts…either in specific areas where you are struggling or to manage the entire effort.  Whether you do this completely internally, completely outsourced or somewhere in between, your company’s ability to differentiate and measure success depends on marketing.

Remember, marketing is a collection of experiments with each one beginning inside of the company.  Your marketing must be measurable to be successful.  Successful marketing leads to long-term profitable leadership in your competitive environment.

 

1 Comment for “Measuring Marketing”

says:

[…] Focus on only one differentiator for the first 2-years regardless of how many competitors you have.  Whichever you choose, you must have the ability to consistently deliver the differentiator better than your competition and you must let your customers know how you are adding value.  Align your entire company along this differentiator and doggedly pursue it.  You’ll have to set up a measurement system to see if it’s working.  See this post. […]

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