As you read the following 10 questions, count the number of times
you can answer “yes” versus “no,” then evaluate
your “Measurable Marketing IQ.”
- Do you know how much an
average customer is worth the first time they purchase from you?
- Do you know the retention percentage rate and average order of customers
from their future purchases?
- Do you know how many times each customer purchases from you during
a one year period?
- Do you know the sales value of your average customer after one year?
- When determining customer value, do you include sales from related
products, including products which may be sold from a different division
or product group within your company?
- Do you know your required response levels, by individual media,
to meet your profit objectives?
- Do you base decisions on the success of media or lists based on
the long term value of the customer after one or more years?
- Have you calculated every imaginable cost into your P&L?
Costs like order processing, credit card fees, premiums, customer service,
returns processing and overhead?
- Do you “back-in” to your numbers by 1) assuming long-term value sales volume, 2) calculating every imaginable cost, 3) establishing
profit requirements, 4) calculating your allowable marketing cost to
acquire or retain a new customer, and 5) determining the required response
rate percentage needed to “make your numbers”?
- Do you convert your allowable marketing cost to acquire a new customer
into the maximum cost per thousand for a direct mail, print, telemarketing
or other media?
If you answered “Yes” to all 10, you are thoroughly measuring
your marketing efforts.
If you answered “Yes” to 8 or 9, you are doing well, and
with some fine tuning will remain competitive.
If you answered “Yes” to 6 or 7, you need to make additions
to how you’re measuring your marketing activity.
If you answered “Yes” to 5 or fewer, you need to make measurable
marketing mathematics a high priority and implement new approaches now
to evaluate your marketing activity and maximize profitability.