Know What Works Blog

At the beginning of RedClick’s relationship with a client, we spend time at the client’s office learning about their existing marketing and operations.  We look at information from customer data that will tell us how well marketing efforts are working.  The most widely used tool to track marketing effectiveness is the Lead Source.  The sad part is that most companies don’t use this tool very effectively.  And, if they do collect the lead sources, no one follows through to review the lead source lists and make necessary changes. 

When I’m the one making marketing decisions with someone else’s money, I need something to back me up.  And, I want to be prepared when a media rep calls to ask me about renewing our advertising. 

We see two types of lead source collection processes.  The first is when the computer has the possible sources and the customer service rep needs to only pick one of the sources in the list.  The second is that the customer service rep writes down whatever the customer answers when asked about the lead source.  Each type depends what the software is set up to do. 

We also see that many companies only write down certain lead sources, and they only ask certain people.  For example, they may only write down if the person mentions major media, yellow pages, Internet, Television, radio, etc…  Or, they may only ask their new customers. 

Another problem that we see is the question that they ask.  “How did you hear about us?” is the most common, and probably the most vague.  The customer may think, hmmm, how did I first hear about this company?  If it was a long time ago, it may be difficult for the customer to remember.   And, don’t you want to find out what brought the call now?  How they originally heard about you may be quite different than this time when they need you.  Better questions would be:

How did you get our number today?

What brought you into the store today?

What made you decide to visit our site today?

How did you get to this page of our site today?

Notice the common word?  TODAY.

And, that brings me to another point.  Why do most companies only ask their new customers about the lead source?  We often find that they use Repeat Customer as the Lead Source.  “Repeat customer” is not a lead source!  Many companies believe that a customer is going to automatically use them again, and they don’t have initiatives in place to bring them back.  So the first step is to create initiatives to continually bring customers back in, then the next step is to track these initiatives that may keep them coming back. 

Let’s say you are a residential plumbing company and you decide to develop a brochure about new services your company offers.  You then mail it to all of your past customers .  Then they see the number, call you, and you never ask them how they got your number.   How would you know that mailing that brochure had any impact?  

Another reason to ask every customer is that the question will become a habit for the people who answer the phone.  And, customers will come to expect it. 

Today is a good day to start collecting the right lead source information.  And, tomorrow is a good day to start looking at it.  You’ll be amazed at how much information you receive that you can use to make media decisions. 

Analyzing the lead source information properly will be the subject of our next article.

New Year’s Day I sat down to work on my budgets.  I did our household budget, and then I set to work on RedClick Marketing’s budget.  For some reason, the dawning of the New Year inspires me to become organized.  Apparently, others get inspired to be organized as well considering retailers are often offering a zillion organizational products for sale this time of year. 

Back to the budget.  I am amazed when I find out that many businesses run without a budget.  How do they know what’s coming up?  How can they plan for expenses?  And, I guess, most importantly, how do they price their services or products?  If you don’t understand your costs, then you don’t understand your price.  If you are undercharging, you are hurting your company.  If you are overcharging, you could be turning away customers. 

There is also a psychological aspect to developing a budget.  You can plan for any scenario on paper, and therefore you give yourself the positive vibe of success. 

I’ve used two methods to developing a company budget. 

The first:  I print out my Profit and Loss statements for each month of the previous fiscal year, then I estimate what these costs will be during the upcoming year.  I also look at the realistic expectation of revenue for each of those months.  Then, the spreadsheet becomes my sandbox.  I can see what my profit would be if my revenue was a lot higher for each of the months, or if I could lower an expense or two.  Then, I’ll play around with adding more people, and what we could accomplish together.  And, then, maybe I’ll double our client base.  The fun of working with a budget is when you have it in spreadsheet software, you can play out the “what-if” scenarios.  And, yes, it is fun!!!

The second:  When, I’m feeling extremely left brained, I may look at my current month’s expenses, and compare them to my budget.  I’ll make a list of what I need to pay this month, next month, and the following month.  I’ll look at what I expect to collect in revenue, and factor in how I plan to pay for some unexpected items, that weren’t in the original budget. 

If you have someone who handles your bookkeeping, you may want to make the second method a task for that person. 

As far as marketing budgets, I create these completely differently.  Marketing budgets are created after the plan.  I’ll factor in the methods and the media costs to achieve the objectives as set forth in the plan.  Then, I will list all of the existing signed contracts by month in the budget.  By the way, I don’t agree with getting a yearly number and dividing by 12.  I will look at the marketing mechanisms that have worked in the past, and add those into the budget.  Then, I will collect media kits from any new endeavor we plan to embark on.  Then, I will add any miscellaneous items that should legitimately be added into the marketing budget. 

The key after a marketing plan is developed is to ensure that the expected amount of revenue is brought in each month.  An amount for off-the-shelf marketing should be placed into expected slow months.  If you don’t need to use it, then great, but at least you planned for it.

Again, I welcome your comments.

When you decide to renew your advertising, what do you use to make the decision?  Numbers? Gut feeling? Recommendations from others? Cost?  Peer Pressure?  Comfort in that you’ve always done it?  Any thought at all? 

Many marketing and advertising decision makers don’t use any thought at all.  They rely on the information that the sales rep gives them.  And, obviously the sales rep isn’t going to say something negative or against the possible sale. 

Using numbers to verify success from an advertising purchase is the logical way to decide if you should renew.  However, sometimes the numbers don’t tell the truth.  If humans are responsible for entering in the data, and it isn’t cross checked somehow, the numbers won’t be accurate.  That’s when you have to think. 

Here’s the story:

A few years ago, a new client of RedClick’s gave us a report that listed all of the source codes of thousands of calls.  One of the largest codes pulling the most calls was Previous Customer.  Do you see what’s wrong with this picture?  Right!  Previous Customer is not a source code.  It was what the Customer Representative used because the caller was a Previous Customer and it was easier than asking “Where did you get our number today?”  We had it changed in the tracking system, and then we had to change it in the minds of the client’s co-workers.  Now that was the tough part.  It took months of watching and coaching.  Now they understand why it is so important.   

Okay, now suppose it is evaluation time, and I need to renew $100,000 worth of advertising?  I check the reports and see that the ads didn’t get that many calls.  If I didn’t think about it, I would have dropped the advertising.  But when I see that too many calls are going to incorrect codes, I get suspicious.  I need to make the assumption that the call count and revenue totals are understated.  But how do I make the decision to renew the advertising?  All of my tracking efforts are wasted. 

Not all of them.  Figure out the total revenue that was attributed to the advertising, and divide the cost into that.  (Cost/Revenue)  This will give you your cost percentage.  If your goal is 15%, and the percentage is 15% or lower, then you should renew the ad.  If not, negotiate to reduce the renewal cost so that if everything continues as it is, your cost percentage will go down.  If this isn’t possible, look at other data such as where people are coming from, ask the people who talk to the customers, spot check by randomly calling a few customers and asking them.  You can call it a Quality Care Check and ask some follow up questions about their experience while you’re asking about how they got your number.  A mathematical method would be to take the percentage of calls that the renewing ad has.  For example, let’s say that it is 12% of the total.  You could take 12% of the incorrect ad codes and attribute them to calls for the renewing ad. 

Please post your ideas for gaining accurate tracking data.