So how do you know if your marketing campaign is working? It doesn’t matter if this is a networking group, direct mail campaign or even social media endeavors. The first step is to know where you were before you started. Make sure you know your operating margins and other key indicators then you can get started.

You will want to calculate the Marketing ratio – sometimes referred to as an advertizing ratio. There are two different ratios you can use. The first you divide the amount spent on marketing by the sales, for the second take the amount spent on advertizing and divide by net income – make sure you use the same time periods for each or your ratios will be skewed.

As with other ratios a 1 is neutral – meaning that you generate $1 in income for each $ spent in advertizing. Now you need to understand what the industry standard is for your business in order to know if you are on the right track. The best indicator however is your own data. Make sure you do these calculations several times during the campaign. Do your calculations before starting the campaign then at intervals throughout and again at the end. The goal is for the number to get closer to 1 as the campaign progresses. If the number is going down you may want to abandon or re-think the campaign –if the number is increasing you may want to consider expanding the campaign.

Keep in mind that this needs to be done in conjunction with other analytics to make sure the success or failure of the campaign is not affected by something else such as price point. We offer monthly or quarterly analytic reports and these ratios can be included in those reports. Schedule your appointment today to see what indicators you can use to increase your marketing effectiveness.