Quantifying Marketing Dollars Spent

The Big 3 for you.

Are you generating future revenues with marketing dollars spent or are you accumulating overhead?  

Are your revenues segmented by income stream where you can track the results of your advertising dollars spent?  

Do related expenses line up with segmented revenue streams where you can understand the net results and how each separate segment affects your bottom line?  

Everything starts with revenues! 

You have the purchase order, a vendor's invoice, and ultimately a disbursement. All expenses incurred should have a specific purpose to assist in generating revenues. This is especially true for marketing and advertising dollars spent.  

Do you have processes and procedures in place where you can track revenues and expenses correctly through the general ledger?  

Lining up segmented revenue streams with related expenses is important to understand how to invest your excess profits.  

Digital and Analytics are a great place to start! 

Are you tracking Google Analytics to your income statement? You should be able to quantify the activity in Google Analytics that should allow you to estimate future revenues.  Some methods for doing so are having separate phone lines for specific service and product offerings that will eventually lead to recording a transaction to a separate revenue stream on your income statement.  Understanding what it means when potential customers visit your website and stay engaged. How many visits will typically generate a phone call or email and ultimately a customer?  Are those visiting your website your defined customer?  If not, how quickly can you pivot?   

Some tracking questions you may ask:

·  Do you actually have a tracking system in place?

·  Do you have an effective CRM system for future tracking?

·  Do you understand Google analytics?  

·  Can you quantify what it tells you?

·  Do you measure prospect activity and attempt to quantify the revenues generated based on the advertising and marketing placed.

·  Are you defining specific calls to action that drive business to specific revenue streams?

·  Can you quantify and track from Google Analytics to the bank and then ultimately to the revenue line item on your income statement?

·  Can you quantify the overall impact of advertising and marketing dollars spent on your bottom line?

·  Is your bank account growing or your line of credit?

With this information, you should be able to compute advertising dollars spent by revenue stream to the results reported in the income statement. You can then properly measure the impact of each dollar spent by business segment and specific revenue stream. You should also be able to compute controllable income which includes the revenues, advertising and marketing expenses, and other direct, variable, and overhead expenses associated with that specific revenue stream.

Your starting point checklist

·  Define who is your customer?

·  Your marketing and advertising dollars should be directed to attack specific customers.  The more granule you get the better opportunity you have to scale your business.  

·  What is the product or service you are selling?

·  Does it line up with your desired customer?

·  Do you have the infrastructure to support your offering?

·  Can you be specific with your message you announce and track the results from the point of marketing to the income statement?

·  Do you have a good CRM system to filter all information and increase direct sales and expand customer services?

·  Can you quantify what you are spending to drive business in each customer offering?

·  Again, this analysis should be computed by segmented revenue stream.

·  Does your website define the core values that will attract that customer go to your website and thereafter come back and engage?

·  Do you have a defined method to quantify the results desired?

·  Can you then measure the results to determine how much money to throw at specific products and service offerings?  

·  How much are you paying for your other touch points such as marketing personnel, mailings, radio, TV, and other advertising methods? 

Customer follow-up is critical, either by surveys or simple phone calls.  Equally important, what does it cost to sell and service each customer? In doing so you ask them:

·  What caught their attention with your marketing material?

·  What shiny object kept them coming back?

·  Why did they become engaged?

·  Did you meet the customers' expectations?

·  A simple survey can define pivot points that require immediate attention.

·  Will the customer provide a Google review? 

·  How much has each customer cost you versus the revenues generated? 

·  Life of a customer's revenue stream discounted back from the terminal period should be computed to determine exactly the value you are receiving from your advertising and marketing dollars spent. 

·  Can your income statement tell you how much each customer is actually costing?  

·  This is dealing with direct expenses, human capital, and other operating expenses necessary to service the customers.  

·  How much square footage in your facility is being utilized, each product and service offerings that have been sold to each customer.  

·  Can you compute the net tax effect by revenue stream?  

Only good general ledger information along with a detailed analysis can give you the correct answer.  You must be entering the information in the accounting database correctly to provide an accurate analysis.  All financial boundaries must be in line to create correct and complete data. Can you use your financial information to project outward to determine future profits from your advertising and marketing dollars spent, along with the other associated overhead costs?  

The entire team will them become part of this process of building the financial budget from the handle.  Good, current, valid information can allow for quick pivots to increase opportunity for a successful financial future.