6 Steps to Conducting a Marketing Audit
Why is a marketing audit important?
One measure of success for homepreneurs is profit. Profits allow for reinvestment and growth as well as providing a cushion in difficult times and saving for the future. Profits are generated from sales and sales come from customers knowing about your business which is a key function of marketing.
It's a simple chain reaction.
Set your benchmark
Whether you’ve been in business for many years or just a few months, it’s worthwhile taking some time to analyse which marketing tactics have been working for your business up to this point. That way you’ll have a benchmark against which you can measure progress as you implement new tactics and upscale existing successful ones.
Step 1: Download the Marketing Audit Template
The first step is to download a copy of the Marketing Audit Template. It provides you with an Excel spreadsheet which you can use to analyse your figures.
Step 2: Download your Revenue figures
To carry out this audit you are going to review your sales figures for the past year, or even longer if you have time, and analyse the figures. Your data should include the customer name (as an identifier), the products or services they bought, the volume, the price and the sales value. Alongside this information you will note how each customer found your business. Was it a recommendation, a Google search, a social media post or an advert?
In an ideal world you will compile this information each time someone makes a purchase. This isn’t an exact science as people may have found you by a variety of means. For a detailed description of marketing in a networked world see Chapter 8 of the Homepreneur book.
If you run an e-commerce store then this exercise may be difficult unless you have a tracking system for each online marketing channel but for the majority of service-based businesses a marketing audit is a relatively straightforward exercise. If you have hundreds of online sales a year it’s time to start tagging your sales by marketing channel. Your e-commerce software should have the facility to group sales by category and by the source of the sale.
In my business, I categorise my sales into:
- training workshops,
- marketing management and
- online courses.
I have clients who have bought from several categories. They have each experienced one or more marketing activities prior to making a purchase.
For example, I have a client I trained several years ago as a result of a recommendation who recently purchased two online courses after a webinar and communications via email. He would be tagged in the audit: recommendation, existing customer, webinar and email. The question which is difficult to answer is which of these marketing tactics do I attribute to the sale?
Another client I met at a trade show I was visiting (costing me nothing) and another at a networking event. You get the picture.
Knowing the source of each client is valuable data but sometimes it is difficult to identify the most important marketing tactic as they may have been exposed to your business in multiple ways – social media activity, signing up for a download, visiting your website several times on several different occasions before making a purchase. Unless you have sophisticated tracking software which maps out the customer journey, you will have to make a judgment as to the most important marketing tactic for each product category.
For service-based industries with high ticket and low volume categorising sales by marketing tactic will be a relatively simple exercise. A SaaS entrepreneur may rely on Google Adwords, Facebook advertising and email marketing for all their sales. An SEO trainer may use paid advertising leading to a webinar and a discovery call to gain their clients.
The aim of this exercise is to know where to place your future efforts.
Work out the total revenue per product or service per marketing tactic and complete the table on the template.
In a simple example of a single service such as will writing, sales might come from just three sources:
- 75% referrals from other professionals,
- 15% recommendations from existing clients, and
- 10% from networking.
Step 3: Decide where to place your efforts in the future and which activities to drop
Knowing this information, the will writer can set about building a wider network with local business professionals, such as accountants and financial advisers. In addition, finding a way to increase the number of referrals from existing clients is a low cost, time-effective marketing tactic which would be a worthwhile use of his time. It might be that networking might go on the back burner for a while. Whatever your business, categorise your revenue by marketing channel so you know what works.
You’ll discover not only the total sales revenue per category but also the average sales figure. You can work out if it’s better to sell in smaller numbers at a higher price or larger numbers at a lower price. There will be lots of factors which determine your decision – e.g. lead time, difficulty/complexity of the work, etc.
Step 4: Work out what can be improved
Evaluate which marketing efforts are working and which you might cut back on. The holy grail for business growth is where your marketing strategy is predictable. As you go through this book, look for marketing tactics you can add into the mix, balancing both the time they take to implement and the costs.
As I have said before marketing tactics work in consort with one another. One builds on another. This makes it extremely difficult to evaluate with certainty exactly which is working. Attributing a sale to your blog, phone call or leaflet alone may be too simplistic as that person may have seen your activity on social media for the past year, signed up for a newsletter and met you at a networking event.
Step 5: Calculate your capacity
Also, know your capacity. How much extra business can you take on without becoming overloaded or where you will have to take on additional help?
Step 6: Set a Budget
Whether you set aside a percentage of sales or a fixed monthly amount, having a budget for marketing where you know the return on investment is a wise move. The amount required will vary from business to business. In deciding in advance that you are going to put aside say 10% of revenue to marketing will at least mean there is an allocation to this resource-intensive aspect of running a business.
This audit will stand you in great stead and is the best starting point for making more informed decisions.
- Download the Marketing Audit Template (see below)
- Analyse your sales by category by marketing activity
- Decide where to place your efforts in the future and which activities to drop
- Work out what can be improved
- Calculate your capacity
- Set a budget