Small business marketing need not be difficult or complicated. While a number of small businesses might ignore marketing, most understand that a solid marketing strategy is pivotal when looking to grow sales and capture market share. Marketing is that one message companies deliver to customers that answers their most important questions. What does the company do? How does it do it? What are its benefits and ultimately, why should anyone buy from them? However, answering these questions depends upon how well the company measures the performance of a given marketing initiative.
Measuring Your Company's Success in Marketing
In our analysis of marketing for the small business owner, we’ll review these two essential criteria for success and summarize each in detail. First, we need to answer the following questions. What’s the ultimate goal of marketing? Is it producing leads, or is it turning those leads into business? Well, as important as it is to generate leads, it’s far more important to close those leads.
A marketing plan’s success or failure isn't dependant upon the number of leads it generates, but on how many qualified leads it generates. This is ultimately why the most important factor of success is a company's conversion rates. After all, only after assessing its conversion rates is a company able to determine how many unqualified leads were generated by a given marketing campaign. This is our first, and perhaps most important, factor of success.
Factor #1: Marketing Conversion Rates
Marketing conversion rates are the rate at which a marketing plan’s leads are turned into paying customers. For instance, let’s assume a given marketing initiative produced 100 leads. Of those leads, only 10 went forward with a purchase order. How would this compare to a marketing initiative that produced 50 leads and turned 30 of those leads into paying customers? Obviously, the second marketing initiative produced a higher marketing conversion rate, and is therefore the better marketing initiative. Despite not producing as many leads, there were a higher number of new customers resulting from those leads.
The best and brightest companies track their marketing conversion rates. Small business owners must do exactly the same thing. If you’re wondering where this information comes from, don’t despair. Ask your customers, it’s that simple. In some cases, it will be rather obvious. A great example would be attending a trade show and coming away with a series of leads. However, in other cases it requires you taking the time to ask your customers. Given the importance of tracking marketing conversion rates, what else must the small business owner track when looking at the performance of their marketing plans?
The above table provides some insight into why conversion rates are far more important than simply totalling the number of leads generated, qualified or otherwise. In this case, it's about comparing the costs of customer acquisition.
Factor #2: Qualified vs. Unqualified Leads
When one thinks of the two most important factors of success in small business marketing, one must include clearly identifying qualified vs. unqualified leads. In our example about the 10 leads turning into customers (from a total of 100 leads), it’s a fair assumption that this first marketing initiative produced some unqualified leads. In this case, it identified possible customers who in all likelihood were never really interested in what the company had to offer. Understanding how this occurs is the basis for ensuring that each and every new marketing plan is an improvement over the previous one. To make this possible requires the ability to segregate qualified vs. unqualified leads.
There are several causes for generating unqualified leads. Was the marketing initiative not specific enough? Did it deliver the right message? Did it reach its intended audience? Most importantly, what does your small business consider a qualified lead vs. an unqualified lead? In most cases, it amounts to improperly identifying customers in complementary marketing & industries. This happens when the buying patterns of customers don’t necessarily apply from one industry to the next.
Comparing these two marketing initiatives will help answer why one produced more qualified leads than the other. One plan produced a series of unqualified leads while the other produced a series of interested leads. The differences aren’t impossible to spot. However, they do require the follow-through ability to identify why one was successful and one was not.
In the table above, a company has tracked its lead generation from multiple marketing campaigns. However, in the end, it all comes down to whether these leads were qualified or unqualified. This is ultimately why the lowest costs on leads aren't always the best leads generated by the company.
When it comes to succeeding in small business marketing, make sure to keep the process simple. Measure the results of each and every one of your marketing plans and always be sure to ask your customers how they came to hear of your business. Correlate these numbers back to your individual plans. In addition, be sure to track conversion rates and qualified vs. unqualified leads.
Success in small business marketing relies upon being able to ask the important questions. Make sure to question why one marketing approach was more successful than the other. It’s this information that will allow you to duplicate that success across all your marketing plans.
If you want to read about how to track your marketing expenditures in an excel sheet, you can read the following post: Sample Marketing Budget Excel Sheet: Graph & Pie-Chart of Expenditures
The above video outlines five low-cost marketing strategies.
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