By Elaine E. Ralls, MBA, DBA
Get the Most Bang for Your Buck After more than 20 years in sales and marketing for businesses with $1 million to billions in annual revenues, it is obvious to me that all organizations have one thing in common: they need to know what marketing, advertising, and sales strategies work best for them, and what their return on investment (ROI) is. Companies need to know how to effectively attract and retain customers. The opportunity cost of not knowing is too high. Successful companies know where to put their money in order to gain the most impact, and they know how to measure the return on their marketing investment. The best place to start is at the end. Determining clear and measurable metrics, as well as the process by which results will be tracked, provides the objective framework that executives need to make intelligent decisions on how to allocate current and future marketing, advertising, and public relations and sales budgets. The purchasing agent’s wildest dream is the sales and marketing executive’s most horrifying nightmare. The purchasing agent’s reason for existing is to turn everything into a commodity. The marketing executive’s cause, on the other hand, is to be flexible with the market and respond to the customer in a way that appropriately supports the growth of the business. With clear ROI measures, company executives can confidently allocate dollars, measure the results, and change strategies to increase effectiveness. The formula is comprehensive. It is critical that every point of contact with existing or prospective customers addresses their needs in addition to capitalizing on an identity or brand. When combined with response management, lead generation, effective sales follow-through, and operational readiness to serve the new business coming in, an intelligence-based advertising approach is a powerful foundation that communicates what the company is, what its value proposition is, and what customers can expect when they do business with the company. The formula is: Brand + Response + Sales + Operations = Measurable Results. How does a Business grow? No discussion of ROI would be complete without looking at where to go to increase business. In a strategic marketing and advertising model, there are initiatives and accountability in the organization in each of the four areas in the formula, with metrics assigned that measure the results of organization-wide efforts. 1. Keep current customers: There are many books on the market today about loyalty marketing. Studies tell us that it is five times more expensive to find a new source of business than it is to keep current customers, and that nationwide, the average lifetime value of a customer is business you can generate from them in 5 years.1 Relationships built on trust and confidence in the products, services, and people will create a sustainable advantage, not only in retaining valuable customers but also in creating customers that will advocate for the organization. 2. Grow business from existing customers: Opportunities exist to grow business from existing sources by offering more, different, or better products and services. 3. Find new customers: Know who your best customers are, where they are, why they are your best customers, and their needs that your organization satisfies so you can strategically target similar potential relationships. Developed by the marketing and advertising team at HMI, the Intelligence-Based Marketing and Advertising Model provides a foundation for companies to focus on implementing effective strategies, measuring ROI, and applying that knowledge to budget reallocations. The four-phase model includes discovery, strategy, execution, and analysis. Discovery. The discovery phase is an opportunity to assess an organization’s readiness to be successful in its marketing and advertising initiatives. This phase also identifies the key drivers that will measure an effective marketing and advertising strategy like assessing the organization’s advertising quotient (AQ). The level of effectiveness of the AQ can be dramatically increased by laying the right foundation and getting the measures in place. This situational assessment addresses: existing primary and secondary data available for profiling and analysis; market conditions, customer segments and competitive analysis; and clarification of organizational goals, performance measurement metrics, and data-capture capabilities. Strategy. In this phase, a strategic marketing, advertising, and communications plan is developed based on the intelligence garnered in the discovery phase. This plan includes prioritized strategies for each customer segment, which take into consideration both loyalty and acquisition tactics, as well as how the results of the strategies will be monitored and measured. Execution. Flexibility, coordination, and management are the elements of success in execution. Often it is possible to reallocate resources in the middle of a strategy if you are coordinating the ROI measures effectively from the start, and can identify campaigns with significant early performance. Execution takes the key success measures from strategy and puts them to the test. This includes: integrated marketing, advertising, and sales approach through coordinated messages across all media targeted to customer segments; media choices that depend on customers’ preferences. Execution may include combinations of print, television, outdoor, e-marketing, direct mail, telephone, fax, special events, and public relations; response tracking, lead qualification, and sales follow-through; and coordinated tracking and reporting of ad response and sales results. Analysis. This is often a neglected part of the process, partially because of frustrations with the organization’s ability to measure the results of the strategies it has implemented, and the organization being unable or unwilling to take comprehensive considerations into account. I call this phase “operationalizing the results.” Considerations include: Financial implications—which marketing and advertising strategies pulled the best leads at the best cost and generated the best revenues? What are the closing ratios by the sales team? Are there revenue differences between customers for each strategy? What is the overall impact on revenues and the revenue mix? Operational implications—how satisfied are the customers? Are we exceeding expectations? Have there been any challenges in serving new business or in retaining existing business? Is our infrastructure and delivery system meeting customer needs? Have we identified opportunities for new product/service offerings? Market response—have our competitors or their strategies changed? What is our market share currently as compared with prior reporting periods? Are the demographics of the marketplace changing in any way that would significantly impact our decisions regarding strategy? Customer response—what do they want, need, like, dislike? Is it the same as prior periods? What percentage of customers (and financial impact) turned over in this period? Do we know why? Are the customer segments and profiles consistent or have they changed? Data is information, information is knowledge, knowledge is wisdom, and wisdom is power. There are five data points that need to be captured in the foundation model: number of targets, cost of strategy, number of leads, number of sales, and revenue. By tracking these data points, you can measure the cost per contact, per lead, and per sale, and the ROI of the strategy Example: employer Lead Generation Campaign In the fourth quarter of 2000, Matrix Rehabilitation, the outpatient rehabilitation division of Beverly Enterprises Inc, chose a major metropolitan market in which to test an employer lead generation strategy. The efforts were to be cost-effective and provide the sales professionals with initially qualified leads, thus improving their productivity by saving them prospecting time. The goal was to increase the number of contracts with key employers in the Metropolitan Statistical Area (MSA) that was chosen. The key objective of Matrix’s national director of sales, Michael Vinson, was to optimize the impact of limited sales resources by focusing his team on high return on investment business development opportunities. Matrix strategically targeted employers where the business relationship would be contractual and where their capabilities would match the employers’ needs. “By testing the lead generation campaign, we identified a way to maximize our investment in sales and measure our ROI. Our team is now spending a higher percentage of their time in front of qualified prospects instead of making cold calls,” Vinson says. Following is a recap of Matrix’s strategy. Campaign goals: secure contracts with employers to provide preventative and rehab services; grow revenues by capitalizing on industrial expertise; and target resources on business that would strengthen the revenue mix. Process: identify target employers in major metropolitan areas; contact employers by phone to identify initially prequalified leads; create database of employers for future sales initiatives; fulfillment of literature to all prospects by sales team; and ongoing monitoring of sales meetings with prospects and ROI metrics tracking. Results: overall lead generation rate of 20%; direct costs per new contract to date ($1,250); initial ROI on campaign (>400%); and projected annual ROI of currently contracted business (24 x direct costs). Implications: business generated reimburses at 98% billed charges; two additional contracts pending bringing additional revenues; sales cycle (prospect to contract), approximately 4 months; heightened market awareness of Matrix’s service and expertise; and obtained contracted business vs handshake referrals. Key Success Measures Behind every marketing and sales strategy that delivers significant ROI, there are key success measures that are consistent, campaign to campaign. One of the most important is an integrated sales, marketing, advertising, and public relations effort. Surprisingly, many organizations continue to fragment these critical functions when every best practice presented supports an integrated model. The sales and marketing experts will focus on how to track the sources of business, target appropriately, and send the right messages. Effective public relations supports the integrated effort. A proactive approach puts you in control of the message that is in the public eye instead of someone else, and provides significant opportunities to position an organization’s messages. Other more specific success factors that should not be overlooked are: Database management expertise. Embrace technology. This is where you will get the information you need to make the ROI models work. If you can’t capture it, you can’t measure it. Objective response tracking. Committing to key metrics that represent the effectiveness of acquisition campaigns and loyalty programs will support effective decision- making in budgeting as well as strategic planning. Multiple, user-friendly response mechanisms. The more ways you can accept business, the better your results will be. Consider phone, fax, electronically, and in person. Coordinated reporting models to track costs, leads, sales, revenues. Operational readiness to accept and manage existing and new customers efficiently and effectively. It is critical that when the phone rings, the email is received, or the fax comes, the organization’s front runners are ready, willing, and able to turn that lead into a sale and build value with that customer. Elaine E. Ralls, MBA, DBA, is the president of HMI Marketing and Advertising, a full-service direct marketing and advertising agency based in Tempe, Ariz. She holds certifications as a case manager, a rehabilitation counselor, and a disability management specialist. She can be reached at (800) 921-7402 or via email: eralls@hmi-direct.com. Editor’s Note: The figures that accompany this article appear with the online version at www.rehabpub.com. Reference 1. Sewell C, Brown P. Customers for Life.
