Testing and Control in Marketing (Cindy Kalamajka)

All marketing plans need to include a control phase that tests marketing methods against the quantified goals of the marketing plan. Most companies use sales analysis tracing “sales revenues to their sources, such as specific products, sales territories, or customers” (Kerin, Hartley et al, 2005, p. 603). With the advent of computerization and data-warehouses, companies can now analyze many different sub-categories of sales data. Some of these include geographic disbursement, discounts, product variations, and order characteristics as well as customer data and profitability.

Lets discuss a fictional company Trader Jane’s and plan for some market testing and control.

Since Trader Jane’s is a new company there are no baselines to compare sales figures versus previous periods. Instead, Trader Jane’s will forecast pro forma estimates of sales figures. This will allow Trader Jane’s the ability to spot areas that are underperforming and allow management to take action if needed. Using ROI marketing Trader Jane’s can measure the effects of its marketing campaign, especially the direct-mail and coupon portions. It is important to go beyond traditional ROI marketing and measure customer responses. The goal of any marketing campaign needs to be looked at, and measured, from a more customer-centric view and in alignment with strategic goals, objectives, and key performance indicators (Eggers, 2007)

Tracking Advertising

All modern point-of-sale (POS) systems have ways to track coupons and specials. Inputting coupon codes is very simple to do and will track the advertising campaigns. Trader Jane’s plans on several venues for advertising; newspapers, direct mail, in-store promotions, in the Trader Joe’s mailer, internet, and direct specials to existing customers.

By using unique identifiers on each piece, Trader Jane’s will be able to calculate the ROI for each campaign easily. For example, if Trader Jane’s sends out a direct mail campaign to 20,000 recipients in a targeted zipcode or area as a two-sided postcard, the mailing and postage costs will be about $6435 (USPS, 2007). The cost for data sorted by income of 35 – 100k, and in the 89074, 89014, and 89123 zipcodes is $900 for 20,000 records (DirectMail.com, 2008). This leaves a marketing ROI of 241% based on a 5% response rate and an average profit of $25 per sale.

Split Testing

Trader Jane’s can also split test any of its advertising to see which offer has the greatest appeal. The website can have a landing page that has different copy randomly rotated and tracked easily with tools from Google for free, or other vendors for a fee. The direct mail campaigns can likewise have different copy for the same offer and the mailings repeated with the different copy weekly or bi-weekly. Many variations and possibilities exist for testing and simply by changing one word in a headline the response rate will be measurable. Have these marketing systems in-place and planned out before launching is important so that meaningful data can be collected. Trader Jane’s also understands that just finding the best advertisement out of a set number of samples is not the end; marketing never stops, and Trader Jane’s will constantly work to measure and improve all its marketing.

You can, of course, get much more detailed in your testing and control, but just think about the basics for now. Test something just to start. Also remember that testing and control are ongoing processes and you either have to change only one thing, or change everything. That is the only way you will know if your marketing plan is working.

References

DirectMail.com. (2008). Build your Order. DirectMail.com. Retrieved June 4, 2008,
from http://www.geoselector.com/geoselector/mapengine/buildOrder.aspx.

Eggers, M. (2007). Is Marketing ROI Dead? Chief Marketer. Retrieved June 4, 2008,
from http://chiefmarketer.com/crm_loop/roi/marketing_roi_dead/.

USPS. (2007). Click2Mail. USPS Mailing Online. Retrieved June 4, 2008,
from https://mailingonline.click2mail.com/CostEstimator.aspx.

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