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How to Measure Your Marketing

In the last post I wrote about How to Create a Small Business Budget, that results in target revenue numbers to support your “want to make” and “need to make” budgets. We figured that a natural follow up would be a post about how to measure your marketing so you can figure out what it will take to generate those revenues.

For this two-part article, we asked our own marketing advisor, Andy McClure, to share his thoughts on the subject. Thanks Andy!

Once small business owners create a budget that not only helps them understand their costs, but establishes target revenue numbers, it is important for them to track their progress toward those revenue goals.

Assuming that investing in a mix of marketing activity is already “baked into” the costs, these two posts will focus on 1) establishing marketing and sales metrics that build up to achieving revenue goals and 2) measuring your marketing on a consistent basis to see if your business is on track.

Establishing Marketing and Sales Metrics

Measure Your MarketingYou may be familiar with the concept of a sales funnel. This view of your business will help you measure your marketing. In order to make a certain amount of revenue, your business must generate a proportional number of sales. A greater amount of opportunities must be created in order to support the target number of sales, and an even greater number of leads are required in order to make the target number of opportunities possible, etc. This image may help to visualize.

All of your marketing and selling activities and investments should be mapped to this funnel. After all, if it doesn’t help your business generate a lead, nurture a lead into an opportunity, or convert an opportunity into a sale, then what is its value?

It may be helpful to use your own vocabulary or a different number of levels in your funnel, but a good start is a four-level funnel as I have defined below. Of course it will be important to identify the actual activities and investments. For the purposes of this post, however, I am solely considering how those activities will be measured:

  1. Reach. This is the top of the funnel and essentially the number of prospects (people who generally fit the profile your business serves) who are exposed to the messages your marketing puts out into the world. The broad measures you would want to track here include the number of impressions your online advertising generates, the overall size of your email list, total visitors to your blog, and other similar broad metrics.
  2. Engagement. This level of the marketing funnel reflects the quantity of prospects who took notice and “engaged” with your message in some way. This might include the number of people who clicked on a link in an email marketing piece, clicked on an online advertisement, requested access to a free report or video tutorial, or something else as appropriate for your business.
  3. Follow up. A subset of the people who engage in your marketing are the ones who signal that they are considering buying from you. Depending upon the nature of your product or service, the items to measure at this stage could include the cumulative value of outstanding proposals, the number of prospects who requested pricing during a period of time, and even the speed of opportunities converting from initial request to sale.
  4. Sales. Finally, as opportunities are moved from a follow up stage into revenue, a few measures are useful to track – average value of the sale, sales by product or service, sales per customer, etc.

Knowing what to track is the first step toward measuring your marketing. Next post – a simple way to track your marketing performance over time so you reach your revenue goals.

Andy McClure Sherpa Business DevelopmentAndy McClure is the Founder of Sherpa Business Development. He works with Bay Area businesses that have between 5 and 50 employees to help them get more customers and generate higher profits from the ones they have.