There's a saying that goes something like “Half the money I spend on advertising is wasted; the trouble is I don't know which half” and you could say the same about any marketing, however the truth is some marketing is simply more measurable than other marketing. And even if it is measurable, sometimes there’s a delay in getting results.

All of this can be frustrating for small business owners who are trying to make their marketing budgets (if they even have one), stretch as far as possible and get the ‘best bang for their buck’. 

This article provides a comprehensive overview for SMEs who are struggling to work out how to get return on their investment in marketing.

Before we even look at the solution to this problem of knowing if your marketing is working, we need to get the question right. It's not "Are we doing enough marketing?" but rather “Is the marketing we're doing helping us achieve our business goals?” There can be a temptation to cram more activities into the calendar even though nobody’s taken a step back to consider how well linked up marketing is to the overarching business goals.

Why are business goals often not connected up to marketing in SMEs?

The reasons for business functions going off in tangents are multiple. It could be one or more of the following triggers for strategic disorganisation:

• Poor leadership and communication – e.g. lack of business strategy
• Too busy firefighting - operators getting pulled into day-to-day challenges
• Lack of marketing expertise – e.g. founder still trying to DIY everything
• No one to coordinate – it takes someone to coordinate the interconnection, this often falls to the busy managing director or CEO who’s too stretched
• Information not updated – it's possible that business direction has moved on and marketing has not been updated to reflect it

Being aware of the obstacles to joined-up organisational thinking is the first hurdle to overcome if you want to facilitate an environment of collaboration, excellent communication, creativity and plans centred around future business sustainability. At the helm should be great senior leadership that makes sure the left hand knows what the right hand is doing across the organisation.

The aim is not necessarily to do more things or even measure more things, but to make sure what you can measure helps inform better decisions and track progress in relation to the overall business goals. The dots between the business goals and the marketing goals need to be clearly connected.

What’s the difference between marketing activity and marketing impact?

Marketing activity in itself can be measured; however, there is not always a strong correlation with marketing impact. Sometimes measuring activity simply reflects the productivity of the marketing team, i.e. measuring ‘what you do’. For example, how many posts, how many emails were sent or how many attended an event. It's interesting, but it’s limited in terms of knowing if your marketing is helping to achieve business goals.

Engagement metrics are slightly better because they tell you how people have responded. For example: how many people visited a website, submitted a form, downloaded a PDF or made an enquiry.

Better still with regards to tracking the achievement of business goals are business impact metrics. Examples of these more valuable metrics include qualified leads, customer acquisition, conversion rates, revenue contribution and customer retention. 

To keep this distinction between the three kinds of metrics and allow you to emphasise impact metrics, you could divide any reporting you do into these categories. I can’t emphasise enough that, aside from making sure the whole business is aligned to the same central business goals, the second most important thing for a business to achieve its vision is to carefully monitor impact metrics. Focusing on the impact metrics that most closely relate to your business goals will make all the difference because it will highlight where you need to make adjustments and drive good decision-making.

Signs your marketing is working

Outlined below are a handful of signs you should look out for and what indicators you can use for measurement. Some of these indicators can be difficult for small businesses without the budget to pay for sophisticated tools or specialised agencies who can provide more objective measurement of things like brand recognition. 

My recommendation for the more difficult-to-measure indicators is to use approximations - sometimes it has to be as simple as customer feedback, sales rep observations and other anecdotal evidence. In my personal experience, expensive measurement solutions often don't make enough of a difference to justify the cost, especially when they usually end up just confirming a hunch you had anyway.

• Your ideal customers are finding you

Indicators:

• increased relevant enquiries
• improved search visibility
• more referrals
• stronger brand recognition

• Your sales conversations are improving

Indicators:

• prospects understand your value
• shorter sales cycles
• better quality leads
• fewer price-only conversations

• Marketing and sales are becoming aligned

Indicators:

• clear target audience
• consistent messaging
• shared definitions of good leads
• better feedback loops

• Your marketing is becoming repeatable

Indicators:

• documented processes
• planned activity
• consistent content
• clear ownership

Signs your marketing is not working

Here are examples of the red flags small and medium business owners should look out for when it comes to their marketing, along with signals that changes are needed. Beside each, you will find some suggestions for why these things might be happening.

• You are producing content but nobody engages with it – not thinking about the audience needs
• You are generating enquiries but not the right ones – could be using the wrong channel
• Marketing decisions are based on assumptions – a symptom of an overloaded marketing department that isn’t spending enough time thinking about what it is doing. Validation can take time, but it can lead to better results.
• Every campaign starts from scratch – inefficiency, lack of organisation, systems and processes
• Your team cannot explain who your ideal customer is – a disconnect between marketing and sales. It’s good for marketing to spend some time ‘in the field’ or at least have good dialogue with the sales team.
• Sales says "marketing doesn't understand our customers" – see above – poor communication between sales and marketing
• You cannot explain what your marketing budget achieved – lack of systems and communication

Why businesses often struggle to measure marketing

There are far too many reasons why a business may struggle to measure marketing to cover in this article; however, the examples below give you some things to consider whether they are relevant in your business:

• unclear strategy
• no defined audience
• disconnected activities
• lack of tracking systems
• unrealistic expectations
• trying to measure everything too scientifically or not focusing on the most important measurements

What are the four key questions every business should ask itself about marketing performance?

• Are we reaching the right people?

>> Measurement will be all about audience metrics.

• Are we communicating something valuable?

>> Engagement and brand positioning (who, what and why) metrics are key here.

• Are prospects taking meaningful action?

>> Conversion metrics are critical.

• Is marketing contributing to business growth?

>> This will be reflected in commercial metrics, but be aware that a buyer’s journey can take a while. Don’t expect results overnight, and remember there are many macro variables that impact commercial metrics, including economic conditions.

How to stop being overwhelmed by performance tracking

Preventing yourself from being overwhelmed by marketing measurement likely comes down to filtering out the measures that will move the needle towards your business goals the most, and focusing on those.

You may also find it helpful to understand which measures matter the most in the evolutionary stages as businesses mature. A brief overview follows:

Early-stage marketing

Focus on:

• awareness
• audience understanding
• enquiries

Growing businesses

Focus on:

• lead quality
• conversion
• customer acquisition cost
• sales pipeline

Established businesses

Focus on:

• lifetime customer value
• retention
• market share
• brand strength

How to create a simple marketing measurement system

Outlined below are practical steps you can take to create a framework to measure your marketing:

1. Define your business goals
2. Identify the role marketing will play in achieving those goals and translate this into specific marketing objectives
3. Choose a small number of meaningful measures to track progress against those marketing objectives
4. Review performance regularly
5. Adjust your marketing strategy based on the evidence

Marketing works when it creates business progress

To summarise everything outlined above, effective marketing is not measured by how busy the marketing team looks, it’s whether it attracts the right customers, creates opportunities, supports sales and builds long-term business value.

If you're unsure whether your marketing is contributing to business growth, get in touch. I can review your marketing effectiveness, identify opportunities for improvement and help you build a stronger, more sustainable marketing approach. Rather than simply recommending more marketing activity, I'll help you focus on the changes that will have the greatest impact on your business.

About Andie Johnson

Andie is the owner of Flex Marketing. Flex Marketing helps businesses grow by allowing them to have the help of senior marketing resource without needing to employ a full time marketing manager. How flexible! We call this outsourced marketing services, however, some refer to it as ‘fractional resourcing’. We help multiple businesses at the same time who can’t yet justify having a permanent senior marketing person, so we become their ‘fractional CMO or senior marketing manager’ for an agreed number of hours per month. Often we drive a particular project or help with a specific business need that may be temporary. Flex Marketing has been helping businesses in this way to grow their businesses since 2011 and is based in Auckland, New Zealand