You can measure the impact of marketing programs by setting up two groups: one exposed to the program, and a control group that is not. With this method, you can test just about anything, though it can get pretty expensive as you add more factors. For example, if you want to measure the impact of an advertising campaign on one of your products, you can divide your customer base into two geographic areas. Expose one group to twice the advertising as the control group, and measure the buying patterns of the two segments. The difference in response is an indication of the effectiveness of advertising campaign.
You design a test by identifying one or more outcome metrics, such as profit, revenue, search traffic, lead, average selling price, conversion rates, etc. You can test just about anything, including:
- Tactics and programs – did a particular product demonstration or webinar have an impact on your outcome metrics?
- Messages – how did your target audience react to a particular message or ad copy?
- Contacts – how often should an event, such as sending out emails, occur?
- Spending – what would be the effect of doubling the budget for display advertising or seminars?
In our previous post, we talked about measuring touches (contact events) in terms of lead-nurturing. You can design tests with particular lead-nurturing tracks (a series of touches) which allow you to measure the effectiveness of a multi-touch approach. Tests have to be set up such that you can determine statistical significance, otherwise you will not have confidence in the conclusions you draw. You don’t need to hit a 95 percent significance level, 80 percent will do for this purpose.
If you are mulling whether to set up a test program, keep in mind the costs and benefits. You will achieve a better understanding of a marketing program’s impact with a great deal of flexibility, and you can probably run the test for a relatively low cost as long as you set up a proper control group. On the down side, you will only be measuring specific tactics, not the effectiveness of all campaigns — the more you test, the more you spend.
A simpler, less rigorous approach is called “pre-post testing”, in which you compare results before and after a marketing program. This approach doesn’t allocate all the credit to the marketing touch since it assumes you would have some sales no matter what. This method is not good at measuring seasonal, cyclical and outside factors, such as the economy, other marketing programs, and sales initiatives. Pre-post testing will at least give you an indication about whether you are on the right track, but it is at best an estimate.