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Marketing Efficiency and Marketing ROI
The return on investments (ROI) made in sales and marketing
activities is a major driver of business profitability.
The challenge is to ensure that expenditure and effort
is invested (a) effectively and (b) with minimal wastage.
Effectiveness of Marketing activities
Marketing programs are most effective when they:
- Target the right customers
- Are engaging, interesting, and/or entertaining to
customers, grabbing their attention
- Are relevant and resonate with customers because they
address their needs, wants, problems, and/or aspirations
- Overcome customer inertia and cause customers to respond to
calls to action
Minimising Marketing Wastage
Solution attraction and need recognition aside, the laws of "differential
investment" apply here: market leadership is likely
to go to the competitor which deploys the greatest amount
of effective marketing and sales investment towards
building customer franchise (this assumes the business
has the skills to be effective in their dealings with
customers!). This includes, but is not limited to "share
of voice" in advertising terms.
Differential investment versus the competition's marketing efforts
can be achieved in several ways:
-
Massive investment - the dangerous game of seeing who
has the deepest pockets, and sometimes without regard
to marketing roi.
-
Being the only business currently addressing a market's needs
(a.k.a. "first mover advantage")
-
Accuracy - knowing where to target investments by identifying
potential customers (and understanding their needs)
more accurately than the competition. Usually achieved
by segmentation analysis and/or customer insight.
-
Precision - of activities designed to reach targeted customers.
Being able to deploy marketing and sales efforts so
that only targeted customers are approached (knowing
how, when, and where to reach target customers). It
is obviously more efficient when programs do not spill
over into customer groups that are either unlikely to
buy, or whose purchases will be unprofitable when the
cost of sales and marketing to them is taken into account.
-
Timing - Understanding customers' buying patterns better than
the competition, so that marketing efforts are not only
targeted at the right customers, but at a time when
they are in "buying mode" or at least firming
up their buying preferences (the timing factor is particularly
important, and challenging, in B2B sales).
Marketing Minds discusses marketing ROI and a process for managing marketing investments.
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