Online Exclusive: Making Sense of Marketing ROI Measurements with 'The Snapshot Survey'Measuring and improving marketing return on investment is a process, not a one-shot deal. There is no magic formula for tracking results. Instead, a combination of measures is usually best and most accurate.
Most measurements are based on one or more of three types of data: accounting (financial performance, amount of money, etc.), addition (items that can be counted such as response rates, timing, speed, capacity, number of new customers, etc.) and attitude (perceptions and opinions usually collected through marketing research).
A productive way to think about MROI measurements is to organize them into seven levels or types of measurement, beginning with little or no relationship with a prospect progressing through higher levels of awareness, becoming a customer and establishing a long-term relationship.
The seven primary areas or levels your marketing ROI measurement can focus on include:
1. Marketing Activity (How much marketing did we do?) The best place to start is with an account of what you're doing. List all your marketing activity -- how are you sending a message to the marketplace. I call this "measuring your output," and simply doing this from time to time helps remind you how hard you're working (or not working). "Output activities" have a cost that you can quantify. The total cost of each effort is an investment and serves as your denominator when it comes to calculating MROI.
2. Placements (How successful are your media efforts?) Next, you need to find a way to measure the "outcome" or results from your activities. The first place to start is by looking at all of the places that could have "amplified" your message. Look at what other people did to help you send your messages, such as the media and the mail carrier. With mailings, you can usually assume that anything that doesn't come back to your mailroom got through to somebody. Whether that person was part of your target audience, and whether he or she actually read your material, are questions for the next stage of MROI.
3. Awareness (Did anyone see our communications?) It's fairly easy to confirm that the communications your firm developed were actually sent and made available to your target audience. These types of measurement go beyond tracking the effort to communicate and begin to determine the impact of the communication. They measure outcomes, not output. Using surveys and other tools, you can begin to determine if anyone remembered seeing your marketing communications.
4. Attitude (Did your activities change anyone's opinion about anything?) Once people are aware that you're trying to communicate with them, the next step is to determine if what you said shifted, reinforced or changed their attitudes in any way. Remember that attitude changes come before customers contact you. You have to find potential customers and ask them questions.
A great technique for gathering opinions and assessing attitudes is something I call the Snapshot Survey. By asking a limited sample of your target audience highly focused questions, you can get directional feedback. You don't need to survey 300 to 1,000 people every time. Instead, 50 interviews with the right people are usually enough to tell you whether your marketing is working. I used this Snapshot Survey technique for a large software manufacturer who created an industry event. To gauge reactions, we interviewed 50 attendees before and after the event. The results clearly showed improvements in awareness, understanding of key messages and other measures. Talking with more people would have been a waste of time and money.
5. Contacts (Did our messages motivate anyone to do anything, like call an 800 number or respond to an e-mail offer?) Contact evaluation studies are a more advanced form of outcome measurement than awareness or attitude assessments. It's often easier to measure this type of behavior because it takes place right in front of you -- in your store, on your phone line, in your mailbox. You might track call-ins or requests for information. You might even be able to sort contacts by product, territory or some other significant categories.
6. Sales (Did we get any new customers as a direct result of our marketing efforts?) The process of further qualifying prospects and converting them into new customers follows something I call the "sales cookbook." As with kitchen cookbooks that help you create delicious meals, this approach gives you a recipe for mixing the right ingredients in the correct order: from contact to appointment to demonstration to sale (or through other primary steps in your sales process). Obviously, the more people you move from one step in your sales process to the next, the greater your overall results. And, slight improvements in your closing ratios (between each step of your process), can very dramatically improve your overall results.
7. Lifetime Customer Value (What is the value of a new customer over the lifetime of its business with our organization?) When people think about marketing, they almost always focus on finding new customers. That means meeting people they do not know and converting some of them into prospects and a few of them into customers. While acquisition is an important component of marketing, this strategy is hard to sustain. An acquisition mentality is a huge problem for many organizations because it tricks managers into thinking that the faster they acquire, the faster they will grow. The "lifetime customer value" philosophy says that marketing should be focused on all that a customer could represent to your organization: revenue, referrals, advice on new products, help in defining your brand image and much more.
It's important to understand what you can and cannot measure when planning your MROI goals and process. You can't measure all facets of your marketing. If you tried, you would spend all of your time and money collecting and analyzing data and do nothing to market your products, services or ideas. Instead, you want to focus on the most important and easily measured data, and to collect it efficiently. Adopt this model to help you focus your MROI measurements and use the Snapshot Survey to collect some of your data.
Lloyd Corder, Ph.D., is founder/CEO of strategic marketing research firm CorCom Inc., and teaches at the Tepper School of Business at Carnegie Mellon University. Learn more about this research tool in his new book, "The Snapshot Survey: Quick, Affordable Marketing Research for Every Organization" (February 2006, $22.95) at Kaplan Publishing (www.kaplanpublishing.com). Corder can be reached at 412/201-2636 or firstname.lastname@example.org.