What Really is Driving Your Business?
You can’t measure your marketing efforts just in revenue.
Julia Carcamo is president and chief brand strategist at J Carcamo & Associates, specializing in brand and marketing strategy. She is also the co-founder of espNOLA, a Hispanic marketing and engagement agency. Learn more at jcarcamoassociates.com and espnola.com.
For years, many in business thought of media in two forms: paid advertising and free PR. Today’s modern marketer understands that we have to look at media in four categories: paid, earned, shared, and owned — PESO for short.
As little as a dozen years ago, most marketers only needed to concern themselves with paid and earned media, even though other forms existed. We “owned” our websites, but we didn’t think of it as media, and for many, shared social was more fun than anything else. The changes to how consumers make decisions have forced all of us to look at and consider shared and owned media with the same, if not more, careful eye and value.
We now need to look at all forms of media in terms of how they influence the purchase journey, ultimately creating a sale. The notion of a sales funnel (though arguably the bane of the existence of many marketers) is probably the easiest to consider. Envision your sales funnel as audiences on top, leads in the middle, and customers at the bottom.
As a casino marketer, I deal with the sales funnel all the time. Consider the foot traffic on a Saturday. We know that a good Saturday night means that we will have approximately X number of people come through the door to get us to a targeted revenue amount. If we fall short of that foot traffic number, we will probably already know we’ve missed revenue before we look at any reports.
Conversely, if we exceed that foot traffic number, we will start counting the seconds before we can get our hands on the flash report (because we know it’s going to be great). That foot traffic is the middle — our leads, or everyone who comes through the door, who may or may not spend money.
Our jobs, as marketers, is to develop a large enough audience (top of the funnel) to generate enough leads (middle or people coming in the door) so that operations can convert some, most or all into customers. If we measure our marketing efforts purely in terms of revenue, we would measure it all wrong because we would only measure the result at the bottom of the funnel (the operations side) rather than at the top (which is where marketing builds the audience). So, the question becomes how do we measure our efforts at the top of the funnel?
ROI is a simple formula — net profit divided by total investment. Now, let’s think about a very simplified situation. Let’s say you want to make $10 this quarter. Your analyst has reviewed all the data, and she tells you that for every person that comes into your business, you make an average of $1. Now you know you need 10 people to walk in the door to make $10.
Based on past marketing efforts, you know that you need to talk to 10 people for one to convert and walk in your door. You realize you need 100 people in your audience to reach your revenue goal. You now have a point of reference to understand what you could spend to build the audience you need to generate the target revenue.
From here, it’s easier to manage your marketing budgets. Additionally, reviewing web analytics suddenly has more of a story for you than just traffic. How many new visitors are you getting to your website (building your audience)? Are you tracking earned media placements in relation to traffic to your site in addition to the traffic you’re driving through emails, social and paid online media? Are you using unique URLs for your media efforts?
There are several things you can measure in each media category. It’s essential to understand which ones are linked to your business. Once you start measuring, you can begin to understand what is and what isn’t driving your business, allowing you to concentrate more on the drivers and less on the efforts that aren’t making a bottom-line impact.
It’s time to think of media efforts as business drivers and not just brand enhancers.