Birds are singing (and we can actually hear them!), the sun is HAWT, and the pool is still cool. For just a moment, things might actually feel normal. And boy, do we love it. We are all searching for normalcy, the familiar, the predictable. “Regular life” is at a premium and people are risking big to attain it. But, as small businesses, we can’t afford that risk.
Everything that we do – from budgeting, to staffing, to allocations and strategy – must be intentional. That includes Marketing…maybe the most important expense we have right now. To be intentional, we must assign measurable, trackable metrics for each effort, especially where there is a real cost.
But it’s not enough to be thoughtful about your movements. Being intentional without review is like trying on clothes without looking in a mirror – you might be able to feel your way through, but you won’t know if it really works…or if the sales lady is just being nice. Without a thorough and manageable ROI analysis cycle, your carefully targeted marketing efforts could cost you much more than you realize.
ROI – WTH?
Measuring ROI (Return on Investment) shouldn’t require a BS in Microsoft Excel, but you do need some math and a great deal of honesty. The temptation is to leave out expenses that seem inconsequential, but those little expenses can add up and eventually move the needle. For those math geeks out there, Increased Margin Dollars – Increased Expenses must = Positive New Revenue. If you are not profiting from your efforts, you need to shift gears.
Increased Margin Dollars – Increased Expenses
= Positive New Revenue
Increased Margin Dollars
To calculate any increase or decrease in margin (profit), you need to start with the average sales for the period and/or sales channel. Again – here’s where you need to be clear and honest with your comparison. Do you look at the same dates from last year? Do you look at the same weekdays from last week? Do you look month over month? Compare Web Sales to Social Media sales? In-person leads to cold-calls? The closer you can get to a true apples-to-apples comparison, the better your data will speak to the success of your new effort.
Parceling-out and totalling expenses for a new effort might feel like untangling a toddler’s hair after a fight with her bubblegum, but it’s important. It’s easy to over-sell your success and turn your back while all your profits go down the expense drain. Here are some things to consider:
- Your time
- Your time
- Creative expenses
- Your time
- Paid resources
- Your admin’s time
- Your bestie’s proofreading time
See a theme here? 😉 If you are not accounting for your time (and everyone else involved), you are not being honest about the cost of the effort. And it’s critical to include every expense, even that new piece of office equipment that you can use again or that ream of glossy cardstock that you only partly used.
So, to truly be intentional with your Marketing efforts, you must first make a solid analysis of your current efforts. Then, use those metrics as a guide to estimate the potential success of your new effort. If you do not see a clear path to healthy, new revenue, turn the car around and start again. While there are occasional reasons to move forward with a campaign with little or no promise of return (visibility, brand awareness/loyalty, philanthropy, etc), you should still have in mind your expected margin increase (or loss).
Look for Part 2 next month for more on Intentional Marketing.