A common question I get asked is ‘What is the most effective form of marketing?’
There is no one-size-fits-all solution to marketing. Marketing is an imperfect science that relies on a certain degree of calculated trial and error, combined with an intimate knowledge of your product/service, industry and target market.
The fundamental key to effective marketing is setting the right expectations. People often don’t set objectives before engaging in a marketing activity, and when they do, they don’t spend enough time setting the right objectives.
So, how do you set the right expectations? You do as Stephen Covey says, “begin with the end in mind”. You identify what you classify as ‘effective’. You set objectives.
Setting objectives is not a new concept. It is a traditional step in a traditional marketing plan. Traditionally, we’ve been taught that a good objective is SMART:
Yes, this is a fantastic rule to apply when setting objectives. But let’s take a step backward and think about how to first identify the end result you are trying to achieve. Take the ‘Back to Front’ approach and start with the end in mind. I suggest taking the following steps.
Step One – The Facts
- Identify what your marketing budget for the year is.
- Write your average profit per sale.
Step Two – The Necessities
Primary Objectives – In order for your marketing to be considered effective, these objectives must be met.
- Breakeven. Divide your budget by the average profit per sale. You need to make this many sales to breakeven. This should be your first objective.Number of sales required to breakeven = Marketing Budget / Profit Per Sale
- Historical Conversion Rate. Your second objective should be the conversion rate. Historically what sort of conversion rate do you get from your sales pipeline?
- Lead Generation. Third objective. Based on this conversion rate, how many leads do you need to generate in order to breakeven?
Number of leads required = Number of sales / Average Conversion Rate
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Once-off vs Repeat Businesses
When setting objectives, it is important to consider the nature of your product or service. If you offer a product or service that is a once-off purchase, set your objectives higher than breakeven. If your product or service has ongoing value, setting your primary objectives at the breakeven point is satisfactory.
Step Three – The Wishlist
Secondary Objectives – These are the more challenging and rewarding objectives.
- Ideally, how many sales would you like to make?
- Ideally, how many leads would you like to generate?
Once you’ve set these objectives, you can identify what marketing methods have the highest chance of achieving these results.
Once your campaign has been implemented, and you start measuring your Return on Investment, these measures will be quantifiable, just like your objectives. This leaves you with some questions to ask and data to evaluate:
- Did we meet our objectives?
- If we didn’t, what should be change?
- If we did, when should we do it again?
- Can we make improvements to get an even better result?
This kind of accountability is what we try to provide our clients with and this is what you should expect from your marketing team, whether they are internal or external.