What is performance analysis in marketing?
What is performance analysis in marketing?
Hello there my name is Martin Henley this is the what the series and in this episode number 10 I’m answering the question What is performance analysis and is it performance analysis that could stop you from getting fired.
In addressing this question what is performance analysis there are five things we’ll be sharing with you; we’re going to give you a definition of performance analysis; a more marketing related definition of performance analysis; we’re going to think about why you need to do performance analysis when you do performance analysis and how to do performance analysis.
Let’s go Ricky.
Did we find a definition of performance analysis?
If we are going to answer the question what is performance analysis? we need a definition and interestingly it seems like marketing people don’t talk about performance analysis. We had to go to some sports people for a definition this time and we found one at the English Institute of Sport. What they tell us is that “performance analysis is a specialist discipline involving systematic observations to enhance performance and improve decision-making through objective statistical feedback.” Now, even though marketers don’t talk about performance analysis I think you will appreciate that systematic observations to enhance performance and improve decision-making would be really valuable in your marketing
What are marketing analytics?
We found definitions for marketing analysis and we found definitions for marketing analytics which are relevant. Wordstream provided us with this definition of marketing analysis they tell us “marketing analytics is the practice of measuring managing and analysing marketing performance to maximise its effect and optimise return on investment. Understanding marketing analytics allows marketers to be more efficient and minimise wasted dollars. So this is marketing analytics is really useful, it’s not a million miles away from the performance analysis that I want to talk about. What you definitely want to do in your marketing is to understand what’s going on so you can maximise your effect, optimise your return on investment, be more efficient and stop wasting money.
Why do you need performance analysis?
Which brings us to the question why do you need to do performance analysis?
The first thing that I want to address is this waste that Wordstream are talking about.
In the nineteenth century there was a very famous, very successful retailer called John Wanamaker and what he said very famously is that “half of the money I spend on advertising is wasted, the trouble is I don’t know which half. The problem for John Wanamaker in 2019 is most of the marketing that we do, most of the marketing that you’re going to do is digital and it provides us with the feedback. If you are not taking the trouble to measure exactly what you’re doing and exactly what you’re getting in return, well I’m afraid if a member of my team came to me and said this I would take them out to the car park and I would shoot them.
John Wanamaker tells us that this waste can look like 50% of what you’re doing and the return could look like 200% of what you’re getting back. Addressing this waste issue is really, really important.
Beyond addressing the waste there are three good reasons for doing performance analysis.
The first is to establish a starting point so you can say to people this is what I found when I picked this up and this is the progress that we’ve made since. That will stand you in very good stead.
The second issue is about motivation. I’m not doing too badly right now but I come from a long line of fat-faced Irish farmers and I don’t need to eat too many potatoes before I start to get really quite big. There have been a few occasions in my life where I have dropped a couple of stone, like 30lbs or 14 kgs. The most successful way I did that was by measuring my progress. Every day I would get on some scales and these scales were only measuring my weight, they were also measuring my muscle mass, they were measuring my hydration, they were measuring like 8 or 9 different things. When I got on the scales every day I could see progress in at least one of those areas which motivated me then to sustain the diet. In this sense performance analysis is about motivation. If you are tracking what you’re doing and you are seeing progress every day that will give you the motivation to continue.
The third issue comes to what we’re talking about in the title of this piece, how performance analysis could get you a promotion or prevent you from being fired. What typically happens is when you take on a role a marketing role your client or your boss will say “you know what don’t worry about the reports, we’re not interested in reports, you just invest all of your energy in achieving stuff.’ What I can guarantee you is that three months later they will come back and they will say “what on earth has gone on?” If you can’t tell them – this is where we started, this is the progress that we’ve made, this is where we are now and this is where we are expecting be – you are going to lose the support of your bosses and your clients.
This goes back to what we were saying in the very first video when we were talking about marketing. The average lifespan for a digital marketing customer in London is three months. Why? Because those marketing agency clients don’t understand what they’re being told and they don’t understand what’s being delivered because those marketing agencies aren’t doing performance analysis and feeding it back to the people who are paying them,
Beyond saving your job, if you are getting support, if you are demonstrating return on investment then there’s no reason why you couldn’t get more investment, to show a bigger return.
So there you are – address the waste, stay motivated and make sure the people that you need on side stay on side.
When should you do performance analysis in marketing?
Which brings us then to point number four which is the question when to do your performance analysis?
If you’ve seen these posts before you’ll be as bored as we are because we say this every time. The time to do your performance analysis in marketing is now. If you are doing something and you’re not recording its effect you are essentially wasting your time. Then you need to do marketing performance analysis regularly. It will depend on how much is going on in your business. If you’re in a really busy role, with lots of inquiries, lots of sales – maybe low value type offerings, then you might need to do performance analysis daily, you might need to do it weekly or you might need to do it monthly.
What I do is generate a report for my clients every month and that’s how I have maintained my customers, in some instances, for more than 10 years.
How do you do performance analysis in marketing?
If you’re hearing me you’re thinking yes Martin I want that motivation, I want that support – I need to do performance analysis – how do I do perforce analysis?
Well we’re still with you. Essentially what you need to do is understand what it is that you’re investing in your marketing, how much time, how much energy, how much money is going into what you are doing. Then you need to record the actions, you need to understand the different campaigns – how many pay-per-click campaigns did we have running? how many social media campaigns? how many email campaigns? how many advertising campaigns are running? Then you need to understand the outcome from those efforts.
If, for example, you are running PPC campaigns you need to track how many people are seeing your ads, how many people are clicking on your ads, how many people are responding to your ads?
The thing about measuring the outcome is that there will be different outcomes depending on the type of campaigns and they will happen at different times in your future. What you’re really interested in, if you are serious about your business is your profit but you only really know how profitable business is at the very end of the year when you’ve looked at all of your costs and all of your sales and you’ve tallied that up to see how profitable you are. you might look at the amount of money that you’ve got in your bank account.
The issue with the money you have in your bank account is that your bank balance is essentially a lag indicator. Your bank balance certainly doesn’t indicate how successful you are in your marketing; you might generate a lead but you won’t see the benefit of that now, it might take the salespeople three months to sell that lead, you might see the money in four months and then only see the profit at the very end of the year.
You need to be thinking in advance about how the performing in terms of lead generation and breaking it down in terms of how many people are visiting your website, how many people are on your email database, how many people are opening your emails. These numbers will all give you an indicator of how your marketing is doing right now. If you wait to see the profit you may not know for 12 months, if you wait to see the money you may not see that for four months, if you wait to see the sales you may not see that for three months, if you’re waiting to see the leads you may not see those for two months. You need to stay on top of everything that’s happening, every action that you are completing, because if you’re waiting to see the final outcomes they not may not be coming for a period of time and if things aren’t going the way you need them to you need to address that.
What you are looking for when you do your performance analysis in marketing is data. You are looking for data, for numbers and they call these KPIs and that is a subject of the next video what is a key performance indicator?
Did we cover performance analysis in marketing effectively?
If you are still with us well done – you now know exactly what performance analysis in marketing is, it’s something they talk about in sport but not necessarily in marketing, the closest they come is marketing analysis or marketing analytics – we’ve defined that for you; you know now why you should be doing performance analysis in marketing; you know when you should be doing your performance analysis and you are getting a sense already of how to do performance analysis.
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We are done here Ricky
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