Measuring Marketing Effectiveness

Marketing effectiveness is the ability of marketing to achieve and optimise short-term and long-term customer results.

Marketing Effectiveness is related to Return on Marketing Investment (ROMI) and Marketing ROI which help describe the relationship between costs and the returns achieved either in the form of profits or leads.

It can be very difficult to measure marketing effectiveness in advance; even after the event it is quite difficult to measure marketing performance accurately; and to clearly identify your most effective marketing activities. A heavily invested campaign can disappoint you; but a successful campaign may also not generate the numerical results that prove the exact contribution the marketing activities made to sales.

When we want to measure the effectiveness of a marketing campaign, there are three things that are essential to know:

1. The first thing is the cost of the marketing activity at a “campaign” level.

2. Next is the volume of leads and revenue generated from the specific sales that were created by the marketing activity (campaign); and how much sales increased after adopting a specific marketing execution / technique.

3. The third thing to measure in marketing effectiveness is Customer Lifetime Value. This is the total Gross Profit generated per year, from a customer, multiplied by the number of years that the customer continues to purchase that same product.

Finally, if a company creates a good understanding of how their customers make a purchasing decision, this understanding can inform future campaigns and in that way significantly enhance marketing effectiveness.