What’s your number?

There’s an old maxim that 50% of marketing efforts are a complete waste of time. The problem is, as the punchline holds, that nobody knows which efforts fall into the 50% that succeed.  That’s amusing only if it’s untrue.

I’m quick to climb up on a soapbox and start to rant when a client or a prospective client (or, for that matter, anyone within earshot) bemoans the “fact” that they just can’t bring in new business. Woe is me, it’s hard, the skills don’t come naturally, I may as well quit. I try to quell my irritation (and remember that I once felt similarly), but it’s easy for me to jump into conversation with a prickly request that’s designed to catch the bemoaning would-be rainmaker short:

What’s your ROI on each market effort?

If you don’t know the ROI at least in qualitative terms, you’re operating in the dark. (You really should know or be able to get quantitative information, as well, but let’s focus on basics for now.)  The truth about marketing is that some of it will fail gloriously, some will succeed wildly, and most of it will just kind of tick along with nothing special resulting.

ROI matters because, in the words of Lord Kelvin, “If you can not measure it, you can not improve it.”

Two key factors help to determine your ROI.

1. Objective-defined measurement. While it’s great to build relationships through networking, if all of those relationships remain friendly or personal in nature and never cross over into business, your ROI is zero.  (Of course, ROI depends on your objectives:  if your goal is simply to meet colleagues and build professional relationships, your ROI could be stratospheric without your landing a single client.  That isn’t a business development objective.)
2. Conversion rate. If you’re looking at ROI for business development purposes, conversion and ROI are almost synonymous.  A conversion rate, at its most basic, describes the ratio of new clients (or new business) to consultations with the potential client.  You must know your conversion rate.  Why?  If you don’t have enough business, a conversion rate of 20% suggests one avenue for improvement whereas a 90% conversion rate means that your problem is somewhere upstream of a sales conversation.  Diagnosis leads to solution.

Depending on what kind of marketing activities you’re doing, you should also know conversion rates for your newsletter sign-ups, your follow-ups after making a call to action in the course of a presentation, and for your direct mail marketing, for example. At the very most basic, do you know how each of your clients found you?  And do you keep records over time so that you can track effectiveness?

It’s important that you know your ROI “number” so that you can guide future activity. One of the most dangerous mistakes I see comes to light when someone really, really believes that a marketing effort will succeed and when he maintains that belief despite evidence to the contrary.

If you’re reluctant to evaluate your ROI, consider the possibility that you may be making a conscious decision to engage in unproductive activity. Maybe what you’re doing is comfortable.  Perhaps it pleases someone else.  There’s no sin in continuing unproductive activity when the lack of results is acknowledged, but I see too many people who are willfully blind to the lack of results, and that only keeps them stuck.

If you aren’t tracking your ROI, start today. Ask yourself how ROI should be measured for the activity you’re undertaking.  For example, is new business the right metric, or is it building strong relationships with a particular group?  In some cases, if you’re building your credentials, you can get tremendous ROI simply by writing an article, having it published, and then using the basis of the article for a presentation.

Once you’ve defined the right measurement, track your activity and results and perform an ongoing analysis. After three to six months, you should have enough ROI information to determine whether the activity is producing results.  If you don’t have solid qualitative data, at a minimum, within six months, guess what?  The activity probably isn’t producing.

If you’re one of those who’s very busy with business development activity but unhappy about the outcome, and if you aren’t tracking your ROI, we should talk.  Please contact me to set an appointment for a complimentary consultation.