A Leading Question

You probably know the old quote, attributed to US department store merchant John Wanamaker in the late 19th century: "Half the money I spend on advertising is wasted; the trouble is, I don’t know which half."

It's all very well to spend money on all sorts of marketing initiatives – networking, advertising, web sites and SEO, trade shows and events, telemarketing, direct mail, social networking etc – but if you don't know where your new clients or customers have come from, how can you know which of those initiatives were cost effective and which were not? If you want to find out which half of your marketing budget is working, you need to know where your leads, and perhaps more importantly, your successful sales, come from.

This is easy if you have small numbers of clients whom you know personally – you can simply ask them what prompted them to contact you. It's harder if you work in the sort of business where you don't have face-to-face contact with each individual client, or your customer volumes are high. Here, your salespeople can be prompted to ask; your web site enquiry form can contain a drop-down list of possible search or advertising sources; your coupon response can include a code identifying the source; you can create source-specific special offers.  For business via the internet, web analytics and email marketing services can provide vital data on which prompts led to the highest click-through rates, and even how long people spend reading your web various pages.

Analysing your lead sources will yield so much vital business intelligence, for example:

• Where your leads and sales come from
• Where your most profitable or highest-value clients or customers come from
• What were the verbal, written, visual or personal 'triggers' that created the best responses
• Whether it is worth investing in achieving high on-line search rankings
• Which lead sources gave you the highest conversion of enquiries into customers
• Which advertisements worked and which didn't
• What advertisement size or positioning works best
• Whether exhibiting at a trade show is worth the money and effort
• Whether entries in directories and web portals are paying for themselves
• Whether you're getting value from your membership of networking groups or business associations
• Whether adding brochures, case studies or other material to mailshots makes a difference to response rates
• What newsletter articles or web site content works best for you
• Whether writing a blog or building your presence on Twitter is a cost-effective use of your time and energy
• Whether time spent on seminars or speaker slots yielded results in terms of new business.

It's relatively straightforward to work out the effectiveness of your lead sources. For a given time period, take the total value to you of all the leads generated, or all the business generated from each source, and divide by the cost of that lead source. You will need to allow for the fact that not all your marketing activities are directly or solely about lead generation, but are about raising awareness, conveying brand messages etc. However, it should become clear what's working, and what may not be working, and you may be surprised by the results. But then at least you can make informed decisions about how and where to spend your marketing budget and your efforts in the future.

20th Feb 2010