The difference between marketing investment and marketing cost lies in our ability to determine the return on investment of marketing expenses. If we can assess the dollars our marketing initiatives bring in — if we’re practicing ROI marketing — then we can determine results and deem the spending an investment. If we don’t know the results, then spending is a cost.
In tough times — and don’t kid yourself, even in flush times — costs get trimmed or eliminated. Sound investments that can prove significant return continue on.
The steps below will establish a basic foundation to allow you to pinpoint your marketing ROI.
Step 1: Create a P/L for every marketing expenditure.
Each and every one. If you can’t, then you shouldn’t be doing it.
Step 2: Do more of what works. Less of what doesn’t.
Make a list of your marketing activities. Do more of the top three items showing positive ROI. Stop doing the bottom 25% of activities. Funnel those resources into the top three.
Step 3: Optimize your data collection and reporting system.
Now that you see how liberating having ROI numbers can be, you’ll want to make sure your systems can track and report activities. If they can’t, then invest in optimizing them. It’s worth it.
By taking charge of understanding your marketing ROI, you’ll get a clear picture of which marketing activities are contributing to revenue, and which aren’t. And that’s the sweet spot of what marketing is all about.