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Difference between revisions of "Marketing Effectiveness"

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Marketing Effectiveness is the measure of how effective a marketing plan is at optimizing spending to achieve positive short and long-term results.It is related to marketing [[Return on Investment (ROI)|ROI]].<ref>Defining Marketing Effectiveness [https://blog.alexa.com/marketing-research/marketing-effectiveness/ Alexa]</ref>
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The concept of marketing effectiveness first came to prominence in the 1990s with the publication of Improving Marketing Effectiveness Shaw,R which won the 1998 Business Management Book of the Year Award. In the book "What Sticks", authors Rex Briggs and Greg Stuart calculated that marketers waste 37% of their marketing investment. Reasons for the waste include failure to understand underlying customer motivations for buying, ineffective messages and inefficient media mix investment (pg 19-20). What Sticks was named the #1 Book in Marketing by Ad Age and is required reading at leading Universities including Wharton School of the University of Pennsylvania and Harvard, suggesting that the Marketing Effectiveness continues to be an important business topic. A preferred marketing effectiveness analysis is [[4S Web Marketing Mix Model|marketing mix modeling]].<ref.history of Marketing Effectiveness [https://en.wikipedia.org/wiki/Marketing_effectiveness]</ref>
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'''Metrics to Measure Marketing Effectiveness<ref>5 Metrics to Measure Marketing Effectiveness [https://www.salesfusion.com/resource/measuring-marketing-effectiveness-5-metrics-need-track/ Sales Fusion]</ref><br />'''
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*Marketing contribution to revenue: This is the big one — what percentage of overall company revenue can be traced back to your marketing team’s efforts? Obviously, the higher the number here, the more effective your initiatives. That said, there’s a lot that goes into telling this story and it doesn’t necessarily tell the whole story, as some areas of effectiveness, like [[Brand Awareness|brand awareness]] and website activity, may take longer to translate into revenue or may benefit the company in non-monetary ways.
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*Pipeline growth and acceleration: How do your marketing activities help grow and accelerate the pipeline? How does this growth and acceleration change from one month or quarter to the next? Your team’s ability to regularly fill the pipeline with new leads and to keep those leads moving down the funnel is a critical component of overall effectiveness. Additionally, it’s important to pay attention to both growth and acceleration, as having one without the other can be a warning sign that something isn’t working as planned and/or that you need to re-focus your efforts to keep the pipeline both full and flowing.
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*Conversion rates: Conversion rates can tell a number of different stories depending on where you’re looking. For example, you might measure conversion rates based on channel to determine the effectiveness of efforts on any one channel or you might measure conversion rates based on stage in the buyer’s journey to determine the effectiveness of particular campaigns to move leads down the funnel. In cases where the end goal is to spur further action (which should be the case for most marketing activities), both of these are critical in determining how well you’ve done.
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*Cost per lead, cost per opportunity: Your marketing team might surface a lot of quality leads and do a good job of converting those leads, but if the cost of doing so is extremely high, how effective are those efforts really? Yes, you’re achieving the desired results, but are you doing so in the most effective way possible? Are those leads worth the price tag? (Note that the answer could very well be yes here, but it is a question you need to ask.) On the flip side, you might find that investing more upfront yields higher quality (re: more valuable) lead and opportunities and, therefore, a better ROI. Your goal should be to find the sweet spot that balances cost with quality and results.
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*Brand awareness: Understanding brand awareness is especially important in industries with longer sales cycles and even just in general, as buyers today tend to do far more research on their own before ever reaching out to a company for more information. It’s important to note that often times the results of brand awareness are more long term, so don’t expect an immediate return here. One way to frame the effectiveness of your brand awareness is to consider it in conjunction with your pipeline. For example, if you find that you have strong brand awareness but your pipeline is lacking, you should ask what you else you can do to use that awareness to fuel more conversions.
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=== See Also ===
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[[Marketing]]<br />
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[[Marketing Plan]]<br />
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[[Marketing Strategy]]<br />
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[[Marketing Metrics]]<br />
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[[Marketing Mix 4P's 5P's]]<br />
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[[Marketing Operations Management (MOM)]]<br />
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[[Marketing Resource Management (MRM)]]<br />
 +
[[4S Web Marketing Mix Model]]<br />
 +
[[5C's of Marketing Strategy]]<br />
 +
[[5P's Model]]<br />
 +
[[7 Ps of Marketing]]<br />
 +
[[Advocacy Marketing]]<br />
 +
[[Affiliate Marketing]]<br />
 +
[[Word of Mouth Marketing]]<br />
 +
[[Undifferentiated Marketing]]<br />
 +
[[Trade Marketing Mix]]<br />
 +
[[Tie-in Marketing]]<br />
 +
[[Test Marketing]]<br />
 +
[[Target Marketing]]<br />
 +
[[Co-Marketing]]<br />
 +
[[Concentrated Marketing]]<br />
 +
[[Database Marketing]]<br />
 +
[[Differentiated Marketing]]<br />
 +
[[Direct Marketing]]<br />
 +
[[Direct Response Marketing]]<br />
 +
[[Guerrilla Marketing]]<br />
 +
[[Integrated Marketing Communications]]
 +
 
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=== References ===
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<references/>

Revision as of 14:39, 18 November 2019

Marketing Effectiveness is the measure of how effective a marketing plan is at optimizing spending to achieve positive short and long-term results.It is related to marketing ROI.[1]

The concept of marketing effectiveness first came to prominence in the 1990s with the publication of Improving Marketing Effectiveness Shaw,R which won the 1998 Business Management Book of the Year Award. In the book "What Sticks", authors Rex Briggs and Greg Stuart calculated that marketers waste 37% of their marketing investment. Reasons for the waste include failure to understand underlying customer motivations for buying, ineffective messages and inefficient media mix investment (pg 19-20). What Sticks was named the #1 Book in Marketing by Ad Age and is required reading at leading Universities including Wharton School of the University of Pennsylvania and Harvard, suggesting that the Marketing Effectiveness continues to be an important business topic. A preferred marketing effectiveness analysis is marketing mix modeling.<ref.history of Marketing Effectiveness [1]</ref>


Metrics to Measure Marketing Effectiveness[2]

  • Marketing contribution to revenue: This is the big one — what percentage of overall company revenue can be traced back to your marketing team’s efforts? Obviously, the higher the number here, the more effective your initiatives. That said, there’s a lot that goes into telling this story and it doesn’t necessarily tell the whole story, as some areas of effectiveness, like brand awareness and website activity, may take longer to translate into revenue or may benefit the company in non-monetary ways.
  • Pipeline growth and acceleration: How do your marketing activities help grow and accelerate the pipeline? How does this growth and acceleration change from one month or quarter to the next? Your team’s ability to regularly fill the pipeline with new leads and to keep those leads moving down the funnel is a critical component of overall effectiveness. Additionally, it’s important to pay attention to both growth and acceleration, as having one without the other can be a warning sign that something isn’t working as planned and/or that you need to re-focus your efforts to keep the pipeline both full and flowing.
  • Conversion rates: Conversion rates can tell a number of different stories depending on where you’re looking. For example, you might measure conversion rates based on channel to determine the effectiveness of efforts on any one channel or you might measure conversion rates based on stage in the buyer’s journey to determine the effectiveness of particular campaigns to move leads down the funnel. In cases where the end goal is to spur further action (which should be the case for most marketing activities), both of these are critical in determining how well you’ve done.
  • Cost per lead, cost per opportunity: Your marketing team might surface a lot of quality leads and do a good job of converting those leads, but if the cost of doing so is extremely high, how effective are those efforts really? Yes, you’re achieving the desired results, but are you doing so in the most effective way possible? Are those leads worth the price tag? (Note that the answer could very well be yes here, but it is a question you need to ask.) On the flip side, you might find that investing more upfront yields higher quality (re: more valuable) lead and opportunities and, therefore, a better ROI. Your goal should be to find the sweet spot that balances cost with quality and results.
  • Brand awareness: Understanding brand awareness is especially important in industries with longer sales cycles and even just in general, as buyers today tend to do far more research on their own before ever reaching out to a company for more information. It’s important to note that often times the results of brand awareness are more long term, so don’t expect an immediate return here. One way to frame the effectiveness of your brand awareness is to consider it in conjunction with your pipeline. For example, if you find that you have strong brand awareness but your pipeline is lacking, you should ask what you else you can do to use that awareness to fuel more conversions.


See Also

Marketing
Marketing Plan
Marketing Strategy
Marketing Metrics
Marketing Mix 4P's 5P's
Marketing Operations Management (MOM)
Marketing Resource Management (MRM)
4S Web Marketing Mix Model
5C's of Marketing Strategy
5P's Model
7 Ps of Marketing
Advocacy Marketing
Affiliate Marketing
Word of Mouth Marketing
Undifferentiated Marketing
Trade Marketing Mix
Tie-in Marketing
Test Marketing
Target Marketing
Co-Marketing
Concentrated Marketing
Database Marketing
Differentiated Marketing
Direct Marketing
Direct Response Marketing
Guerrilla Marketing
Integrated Marketing Communications


References

  1. Defining Marketing Effectiveness Alexa
  2. 5 Metrics to Measure Marketing Effectiveness Sales Fusion