The Horse Comes Before the Cart, Part 3

This week I have been emphasizing that the successful implementation of any strategy requires it be executed within the framework of a comprehensive marketing plan. Diving into a marketing campaign without first having a plan of where you are going and what you hope to accomplish is putting the cart before the horse, and makes you vulnerable to “tactical soup.”

Today I will conclude this three-part series by discussing the monitoring and evaluation of your plan.

8. Sadly, the critical step of monitoring results is often omitted by small businesses. Don Bradley and Chris Cowdery of the University of Central Arkansas conducted a study titled Small Business: Causes of Bankruptcy. They found that 58% of businesses that filed for bankruptcy admitted to doing “little to no record keeping.” Without an adequate accounting system, a business cannot fully understand its revenue cycle nor have a true picture of its marketing costs. You cannot manage what you cannot monitor, and you cannot monitor what you do not measure.

Measure, monitor and manage, in that order!

Include hard and soft-dollar components when measuring marketing costs. A $3,000 invoice for a newspaper ad is an obvious cost. However, a portion of the salary and benefits of the employee who spent four days writing and editing the copy is also a marketing cost. Do not fall into the trap of thinking that if a tactic has no hard costs (as with many Internet tools) that it is cost-free. The risk of this mindset is skipping the evaluation phase of the planning process. Time is a scarce resource in business. The opportunity cost (measured by what else you could be doing) of your time has value. It must be examined and justified in light of the marginal revenue it generates.

9. Finally, at the risk of over-simplification, the evaluation stage is largely a matter of comparing actual costs and marginal revenue to the expected numbers. However, knowing things like who responded to your promotion and whether they bought only sale items or made additional purchases are also important. This is a time to be objective and cold-blooded! If a marketing tactic exceeded cost expectations or failed to generate the required sales, cross it off your list. Never fall in love with an idea.

As you construct, implement and fine-tune your marketing plan, remember that it is a management tool. It is a not weapon to punish yourself or your employees. No one succeeds all the time; we often fail the first time! If costs exceed the benefits, take a page out of Thomas Edison’s playbook. When challenged about experimenting with over 10,000 different substances before picking a carbon filament for his light bulb, he replied, “I have not failed. I’ve just found 10,000 ways that won’t work.”

Learning that something will not work is valuable information!

Let’s talk more on Monday. Have a great weekend!

© 2011 by Dale R. Schmeltzle

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