Measure by Measure

At the initial meeting with my personal trainer early last week, I handed her a piece of notebook paper containing my pertinent body part measurements (in inches), weight (in pounds) and fat content (expressed as a percentage) and said, "Your job is to teach me how to make these numbers go down over the next six weeks." Without blinking, she said, "Let's get started."

As annual planning time comes around for most of us we can almost hear upper management telling us, "Your job is to make our sales and margin percentages go up in 2005."

Are you blinking OR are YOU ready to get started?

What's Worked?

The first thing my trainer did was to ask me what I had been doing and what my results had been to date. I strongly suggest you take the same approach with planning your business's marketing efforts for 2005.

First list the programs and plans you put in place 12-18 months ago and actively implemented during the year. Then objectively assess the outcomes - the relative success of those programs.

Right about now some of you may be asking yourselves..."What is the best way to measure a program's success?"

In his book, The Fundamentals of Business to Business Sales and Marketing, John Coe offers his list of measurement options that are both common and useful for BTB companies.

Depending on how connected various departments are at your company - especially Marketing and Sales - you may find some of these measures are easier to pull together than others. The ones near the beginning of the list require little interdepartmental communication.

The measurements further down the list tend to be more meaningful to upper management as they reflect both the results as well as the costs, but they do require more internal information sharing.

Here's just a sampling of measurements you may find helpful as you begin to plan your marketing efforts for 2005! If you prefer, you may also request a complete list!

Activity Based Measurements

The best thing about these simple measurements is that they are easy to pull together as all the data are generally found in one department - usually Marketing. The major drawback, again, is that they only look at the COST side of the various programs.

• Cost per thousand - In the BTB world the CPM measure is used most often to compare media costs across different trade magazines. How many dollars does it take to reach 1000 readers? Make sure you use the costs for a standard size unit (full page, half page, etc.) for all the magazines.

• Response Rate - Generally associated with direct mail campaigns; it tells you what percent of the folks exposed to your program responded to it.

Value Based Measurements

These measurements begin to shift marketing plan discussions from "cost" to "results." Beware that long selling cycles sometimes require making assumptions about the efficacy of programs. Make sure you communicate your assumptions to your readers or audience.

• Value per Lead - This measurement requires two assumptions; one, what percent of the market will respond and, two, what will each of those responses bring to the company in terms of sales and profits.

• Value of Market Opportunity - This measure is similar to Value Per Lead, except that it projects what the total sales and profit numbers would be if 100% of the audience responded to the offer or program.
  

Let's Hear It For RESULTS

Want to convince management that your programs have been successful in the past? Then use RESULTS-ORIENTED measurements that prove their worth.

For the TOP THREE RESULTS MEASUREMENTS read on below….

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Results Based Measurements

These measures really answer the question "Was that program worth doing?" They factor in the overall costs of a program as well as the revenue and or profits generated.

• Breakeven - Divide the cost of the program by the margin generated by incremental sales. If your answer is less than "1" your program paid for itself. (Check with your CFO if he wants you to use gross or net margin.) The larger your margin percentage, the fewer sales you needed to breakeven.

• Return on Expense - Divide the margin by the cost and multiply by 100 to get your ROE. Since most managers don't view marketing costs as an investment this expense ratio may be of interest to them.

What Gets Measured Gets Funded

The great news about these measures is that they not only work to evaluate past programs and provide you and management with powerful information for future planning, they ALSO help you sell your future program recommendations during the annual planning process and presentation.

Do your homework, demonstrate that you have strong numbers to support your programs and you may get that funding more easily than you thought.

As for me and my trainer - I'll let you know if we were successful. I won't tell you specifically how successful, but she and I will know that ....and make plans accordingly for the future.

Remember, Mosaic creates customers for business-to-business companies through specific project work, on-going retainer assignments or marketing coaching sessions.

Until next time.....

Rosemary Walter
847-483-5018
Rose1Walter@MosaicMM.com

Quote of the Month

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"By Rosemary Walter of Mosaic Marketing Management, Inc. Please visit Rosemary's web site at http://www.MosaicMM.com for additional marketing articles and resources on marketing for business to business companies."