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Profitable Times Newsletter

Is Your Current Marketing Strategy Working for You?

Let's start by reviewing how you will determine the answer to this question, which incorporates a combination of art and science considerations. The key is data, and still more pertinent data. Everything you do and evaluate should be informed by data and the results recorded. There is, however, such a thing as too much data. Collecting data just for the sake of having it, or because the POS or other systems can generate it, can be excessively time consuming, distracting and can lure you away from focusing on what's critical.

What core, relevant and customized Key Performance Indicators (KPI) should you collect, and when and how will you do it? First, goals need to be set and memorialized, i.e., written down in ink. Regardless of the marketing efforts eventually employed, where do you want to be at the end of a time period? The time period can be a general date on the calendar or the end of a specific event. If you have multiple goals prioritize them from the beginning.

What KPIs are the best measurements of progress and success? What should be included in your data dashboard? Is gross revenue the only important measure or are incremental revenue building blocks, so you have a better idea of how what happened, happened, important too? Understand, profitability is not being neglected, but the difference between net sales, as you work your way down the profit and loss statement, and the bottom line, except for expenses directly related to marketing efforts, has very little to do with marketing.

How will you collect the data you need? Monthly is a reasonable schedule, but more frequent data collection during critical plan execution periods may help to identify trouble spots in a timelier manner, allowing for quicker course corrections if necessary.

What predictive analytics are necessary? The term sounds a bit daunting but most museum store managers already do this as a matter of routine when determining budgets, revenue goals and merchandise-buying plans. These comprehensive processes already include some sophisticated, established predictive analytics such as consideration of overall attendance, ebbs and flows of visitation, characteristics of the visitors, open to buy and a myriad of other factors. This effort also incorporates visitation expectations for the institution as a whole and a sixth sense about the appeal of a special exhibit and the strength of available related products.

What are some critical objectives?

Revenue Generation

Since there are so many possible sources of revenue this is an incredibly complex metric within cultural commerce. How do you distinguish, for example, between revenue generated by sources that are not directly influenced by marketing and those that are highly dependent on it? But, if you can only track one KPI this would probably be the one, because generating revenue is the ultimate aim of most efforts.

Capture Rate

We know many factors affect the capture rate such as product selection, store location, customer service, range of prices that appeal to many different customers, merchandising, display and more. Marketing can affect the rate of improvement by driving awareness of some or all of these factors.

The number of people crossing the threshold into the store is not part of the typical capture rate calculation. However, knowing this number and comparing it to the information that is part of the capture rate calculation can help determine if marketing the store has been done well but the in-store customer experience did not capitalize on the opportunity.

Return on Investment (ROI)

This may be the most important criterion in that it takes more than just revenue into consideration. Once a marketing goal has been established, ROI can be used to compare and understand the efficiency of different marketing approaches. What did it cost in terms of money, staffing and other resources to reach your goals? What was the result as measured by applicable criterion?

A factor that enhances, and complicates, the calculation of ROI is the definition of the length of time included in "return". Is the immediate revenue associated with a limited duration special event sufficient? How is a broader engagement, such as membership purchase or volunteering measured? For memberships the question becomes what was the cost of getting the membership as measured against the lifetime value. While this is a complicated question, newer more sophisticated POS systems, with purchase history capture, have the capability to provide the information required to determine the answer.

In summary, to determine if a marketing strategy is working for you, set expectations, focus on the most important components incorporated in the marketing effort and consistently measure and record results.

 
See the complete list of Profitable Times™ Newsletters.

 

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