small business gurus - the blog of Cat & Keith Matson

by Cat Matson

Inspired by 2 separate conversations in the last week about whether Small Business Owners should renew their Yellow Pages advertising contracts, and how to determine if that 'investment' was worth it, here is the article I've written for this week's edition of The Westerner.

I know that you know that you should be measuring a ‘Return on Investment’ (ROI) for your marketing and advertising efforts.

But I also know that for most Small Business Owners measuring that ROI just goes into the ‘too-hard’ basket. So, they don’t ... and when it comes time to making another marketing or advertising investment they make a decision either on gut-feel or habit.

Yes, it can be difficult to get an accurate ROI on your marketing as it requires a strategic approach not just to your marketing measurement but also your accounting systems. But it’s not impossible. Here are some actions you can implement relatively easily to start measuring your marketing effectiveness.

1. Track where each new enquiry or sale comes from. This can be a simple question when you’re talking to a customer -‘how did you hear about us’ and then noted on a tally sheet or in a simple excel spreadsheet.
2. Next to that tally, note the value of the current sale. Sure, you are likely to get more sales from one customer or client that is hard to place a value on now ... but at least you have something to measure.
3. Track each of your marketing expenses as separate line items in your accounting system. [Note this requires that you depart from the usual ‘alphabetical listing’ in your Chart of Accounts in favour of a system that actually assists your decision-making process].
   For example, establish a category called Marketing (in expenses), under which you have ‘sub-categories’ of different marketing expenses – advertising, networking, sponsorships, direct-mail etc. If you advertise regularly in a number of publications, you might consider creating sub-categories for each publication so you can easily measure the return of each publication.
   
4. On a monthly basis, determine the sales you’ve generated from various marketing activities using the tally sheets created in steps 1 and 2. Compare these figures to the investment made.
   

Is it a perfect system? No. But it’s a start. And you’ll at least have a better sense of whether your marketing is really paying its way.

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