Measuring Marketing Results

*The following is a recap of some significant ideas from an article published in CPA Trendlines. You can read the entire article by clicking on the link below.

Measure Results

Marketing requires measurement of the results.  If you can’t measure and track the results, don’t use that marketing initiative.

Tracking means identifying the origin of revenue.  And you should be able to measure the ROI of the revenue and compare marketing initiatives to each other.

Let’s assume, for example, that after a month of advertising on radio and Google Adwords, your $8,000 radio campaign generated 40 phone calls  ($200 cost per lead).  Google Adwords are $30 per click, and one in four people fill out your lead form – that’s a $120 cost per lead. (Editor’s note: These may or may not be mutually exclusive initiatives, depending on your marketing budget.  And you might consider the quality of the leads, probably in terms of the potential revenue from the proposals you deliver).

Acquisition Costs

How do you deal with the cost of client acquisition?

For tax preparation, the author believes you should invest an amount equal to the expected fee, because of the likelihood of a long-term revenue stream from this client if the engagement is successful.

Where potential engagement revenues are higher than tax preparation fees, such as in tax resolution, you can typically invest 30 percent or more. A typical telemarketing operation will have a cost of client acquisition in excess of 30 percent. Paying $1,200 in sales commissions, list costs and other overhead is not uncommon on a $3,000 client.

Direct mail can cut this number in half. When you invest $600 for a $3,000 engagement, that’s a high reward.

A rough general rule of thumb: Spend up to 1/3 of your client revenue to acquire the client.

Improving the Response Rate

How can you make a printed ad more effective and track its effectiveness?  Make your logo smaller and your phone number larger and include a call to action like, “Is the IRS Making Your Life Difficult?“

For direct mail use a different phone number on each mailing piece. You can inexpensively rent phone numbers. This allows you to easily determine which pieces were most effective.

Test different elements of each mailing piece. You can use two mailing pieces with identical content except for the headline.  For example one headline might be $199 Flat Fee,” and another might be “50 percent off.” Each of these two has a different phone number or code so you can track and determine which headline resulted in the best response rate.

If you would like to read the entire article, visit www.cpatrendlines.com and look for the article posted Thursday November 30, Marketing and Sales, titled “Marketing Requires Ruthless Accountability.”