SME’s say marketing is critical to growth, but measuring return on investment (ROI) holds them back. Has it held you back?
This was the question posed to members at our recent Business Exposure Group meeting.
If ROI is difficult to measure for a marketing activity, then don’t do it, was the view of one member. Others felt that they did unplanned marketing activities with no certainty of ROI and not included in the marketing budget. Research shows that businesses that develop and use a marketing plan go on to outperform those that don’t, by an average of 30% and every £1 spent on advertising benefits an SME eight times as much as it would benefit a larger company (Deloitte).
Marketing is important to SME’s but, lack of budget, lack of expertise and time are barriers. Some of our members see marketing as a cost, not an investment in the future, and only 20% of SME’s believe that increased marketing spend will be their path to growth.
However, those businesses which seem to be flying are marketing led. They have the marketing budget at the top of their business agenda – if you are not spending you are not gaining customers!
Tracking where the enquiries are coming from is crucial. It is easier to track ROI from a digital campaign rather than a traditional one. Always ask an enquirer where and how they found out about your business. Is your record keeping system good enough to make sense of where to spend your money? Understanding, ROI is important, but some felt that measuring ROI was futile because most marketing is about creating long term brand recognition.
68% of SME’s say it is difficult to get customers to take action as a result of marketing, questioning how much should be invested.
Consider a ROI formula? ___ROI ____ x 100 as a percentage, so you can work out
whether one medium generates 15% and another 50%, then clearly you know where to invest your money. When you spend £1 on marketing how much should you expect in return? A good return thought by the members was in the region of 5/1.
If a marketing activity can’t be measured perfectly, it doesn’t mean it shouldn’t be considered, but don’t throw money across the whole marketing mix without deciding quickly what works and what doesn’t.
All the members concluded that they needed to spend more time on the question of ROI when glibly doing ‘appropriate’ marketing.