Measuring Marketing ROI: The 3 Mistakes Service Businesses Make

When it comes to ascertaining the return on their marketing investments, service businesses rarely, if ever, obtain useable information Much of this has to do with the nature of selling services, the role of word-of-mouth, the difficulty in measuring certain types of marketing tools (e.g., brochures, articles) and the cost of the time involved in implementing marketing and business development programs.

However, much of this also has to do with some faulty premises these organizations make in attempting to get a true picture of the effectiveness of their marketing initiatives.

The first of these lies in the manner by which service businesses go about interpreting results. Typically, they will decide to implement a marketing initiative and then at some later to be determined point, assess whether this activity “succeeded” or “failed” in generating new revenue. For example, they will look at how much money was allocated for a seminar or an advertising campaign, see how many new clients came of it and how much new revenue these customers brought in. The calculations are easy to make. How much money did a particular initiative cost and how much did it generate? If the numbers don’t meet the organization’s anticipated projections or goals, the effort is declared a failure with the odds of ever implementing a similar, second attempt dramatically reduced.

What is the mistake these businesses are making? They are assuming that each and every marketing initiative they undertake exists in a vacuum – that the seminar is the only exposure the prospect has to the firm, that the television viewer’s only contact with that organization comes through the viewing of its commercial, etc. In truth, most communications, and certainly most successful communications are in fact successful, because the prospect has been exposed to a message a) a number of times and b) in a variety of ways.

An individual who registered for a seminar may have seen an ad or a press release for the event or perhaps even been told about it by a friend. He or she then attended the seminar and came away with a positive or negative impression of the person who made the presentation. After the seminar, that individual went home, and in wanting to learn more about the organization, decides to check out its web site. Then, at the first appointment, while sitting in the waiting area, that potential prospect starts to read one of the brochures strategically placed upright on a credenza in the room. Thus, prior to actually contracting with the company or retaining the professional practice, that individual has been exposed to a representation of it somewhere between 4 and 7 times.

It’s no different for the television commercial or the direct mail piece or the press release or the Facebook page or any other type of vehicle – including personal referrals from friends and associates. Individuals can be and are exposed to service businesses any number of times. This can work either to the company’s advantage or at times, even to its disadvantage.

Consider the individual who meets an attorney at a networking event in which they engage in a long discussion on a matter of particular interest to the prospect (first exposure). When that prospect goes home, he visits the firm’s website, only to discover that the firm makes no mention whatsoever of the kinds of services in which he is interested. Here, the potential of a second quality exposure has been lost. The prospect now may have some doubts as to the credibility of that attorney simply because the firm’s expertise on the issue has not been adequately conveyed in the site. In this particular case, the web site would not have been the factor that generated the case for the attorney (that being their meeting at the event), but it might have been instrumental in turning that prospect into a client. The attorney’s probable takeaway from this sequence is that their encounter didn’t go as well as he had thought (and thus either that face-to-face networking is not his strength or that the prospect was not a serious lead), when in fact it was the lack of rich content in a non-awareness generating vehicle (the web site) that was responsible for the failure to close the sale.

To fully appreciate the importance of how marketing tools are intertwined, consider a situation in which one is solicited on the telephone to apply for a credit card the name of which is not well known. Chances are the response rate will be relatively low. Now consider a telephone solicitation effort for a highly branded card such as Visa or Discover. The response rate will in all likelihood be considerably higher. Why is that? It’s because the advertising has built awareness (and credibility) for the product even though it may have not have directly spawned any direct leads on its own. In this case, the branded advertising campaign served as a facilitator for the telemarketing effort.

Because of the misconception of measuring only direct leads/clients, service organizations then make a second crucial mistake. They ask that new prospect “Where did you find out about us?” The individual then says something akin to, “I saw your ad,” “I googled you on the web,” or “I attended your seminar,” etc. The response is duly noted and the revenue from that new client is credited towards whatever activity was cited in the response.

What that business should be doing instead is prompting the new prospect/client to, as best as he can, name all the areas in which he’s seen, read, heard, learned about the business. By “all,” we are not just referring to outreach vehicles such as ads, mailings, seminars, articles, pay-per-click campaigns, etc., but also to referral sources – other firm clients or associates of the prospect, who may have mentioned the firm. By capturing this data, we can begin to get a much better picture of what is working and what is not and as important, what combination of activities is working most effectively together.

To implement such an intake process is where we come to the third mistake that these entities make – and that is failing to actually have an intake process and/or requiring strict adherence to one. The objection to adhering to what really amounts to a one-question survey (i.e., “Check all the ways in which you’ve learned about our company”) is usually one of logistics as though adding this extra burden to an individual’s responsibilities would be unfair and cumbersome.

The net takeaway? We should not assume marketing activities work in a vacuum or that new business is generated in a single direct way. Second, ask the one right question. Finally, demand strict adherence to this process.