This is the $64,000 question for small business owners who advertise locally. It is often asked and rarely answered well.
A few days ago I was talking with Jeffrey Fox about this and he gave me a great idea that might help you answer this question.
Jeff focuses a lot on what he calls “dollarization”. This is his word for putting a dollar value to whatever product or service you’re thinking about buying. In his books and articles he shows examples of how to do this with many products and services.
The trouble with advertising is this. For most local businesses, the best advertising is the kind that generates awareness of their business. And this works best when multiple media are used. But this makes it difficult to attach specific results to any one ad.
But, Jeff has a solution for us.
Create a “marketing results calendar” that will help you track both marketing expenditures and revenue.
This is just a three-column sheet. List your monthly revenue in the far right column. In the far left column list the month and year. In the middle column list whatever marketing you did that month. Don’t list just what you spent. List all the marketing activities that took place that month.
You’re creating an easy way to see how your marketing efforts drive revenue.
Jeff said you might have a three or even six month lag between a marketing event and a sales increase but that’s okay. You’re looking for trends over time, not immediate results.
And you need to factor in normal, seasonal fluctuations in your revenue.
Remember, this is not a perfect system nor will it help you see exactly what results you’re getting from every ad you run. But, it will help you see (over time) if your marketing expenditures are helping you generate the level of revenue you want.
Does your company use a system like this already? if not, do you think it would be helpful to you? Please let me know what you think.