Whenever someone tells me that marketing is expensive, my question to them is: compared to what?
Management guru Peter Drucker once said, “the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs”.
So when a business owner says marketing is expensive, what is he/she comparing it to?
Operations or credit control that actually consume resources?
The reason the majority of entrepreneurs perceive marketing as expensive is they do not know how to calculate their marketing returning on investment.
Effective marketing is psychology and mathematic.
The psychological aspect of the marketing is the story behind the product or service and the solution they provide.
The mathematical aspect of it is your marketing return on investment…The amount you get out of your investment.
This is why most marketing fail.
The majority of businesses do not have mechanism for calculating their marketing return on investment.
Even those that have, in the large majority of cases, use the wrong metrics.
For example, businesses engaging in online marketing calculate the amount of impression, engagement or click through rate.
Although these figures are important to calculate, they do not provide the full picture.
There are other key variables to consider when calculating your marketing return on investment.
In the next part of this article series, I will outline those variables…Look out for part two of: ‘How To Calculate Your Marketing Return on Investment’.
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