Business coaches with ActionCOACH use the term testing and measuring frequently. This practice forms an essential part of our ongoing mentoring programs with clients. What are we talking about anyway? It’s quite simple,read on.
Why is testing important? We don’t realise it but we test everything in our daily lives. You always take a new car for a test drive before you sign on the dotted line. When you go shopping at the supermarket, frequently promoters are standing in the aisles with samples for you to test before you buy. Paint companies supply test kits for you to try before painting the entire wall or room, waking up in the morning and checking the weather before selecting your clothing for the day is also a form of testing. So we do it all the time, we just don’t think about it.
Another reason why testing is important is that if something you want to improve on is within your control, then as soon as you start to measure it, improvements will begin to happen. Even before you work out how to improve the situation it will start to improve anyway. Strange but true!
Yet businesses persist in embarking on expensive marketing campaigns with little or no idea of the outcome. These same businesses will spend thousands of Euro on an advertising campaign and hope they get a response worth the expense but never really know whether they did or not. I firmly believe in testing a new ad campaign before the majority of the budget is committed. You may think your advertisement is wonderful, but, face it, no one knows with certainty the outcome of a daring new campaign and it is a known fact that 80% of all ads fail. So I suggest that my clients commit 10 – 15% of the new campaign budget and test for the outcomes.
This then leads to the balance of the phrase testing and measuring. There is little point in going to the trouble of conducting a test in the first place unless one follows through with some type of analysis of the results. Imagine taking that new car out for a test drive and not paying any heed whatsoever to the quality of the ride, the noise levels and the engine performance. Not reasonable is it? You would instantly compare this new car to your old one or other new cars you were considering wouldn’t you? You would have your own form of measurement to compare the car with others. Your taste is a form of measurement when you try those samples in the supermarket. If you lost your ability to taste why bother trying the sample at all? I imagine you get the point.
Now, back to our business analogy; there is no point in testing the outcome of any type of marketing campaign with no measurement of the outcome. Careful measurement and analysis of the results of a test campaign will provide much needed information on which to base decisions. The results of the measurement will quantify the success of the test campaign. The results can then be extrapolated to test the soundness of the campaign. Example; a test mailing to 500 households yields 10 responses. Each response results in an average sale of €150 with a margin of 40% that adds €60 to the company’s profits which is €600 overall (€60 x 10 responses). Let us assume the overall cost of the mailing is €1 each or €500 in all. The company then made a net profit of €100 (€600 profit less costs of €500). This campaign appears to be a winner! You now have the data with which you can make an informed decision whether to expand the campaign, tweak the advertisement and measure to see if there is an improvement or drop it altogether and try a different one.
For further discussion on the above strategy or coaching services in general, you may contact Fergal Keane at 01 8241816 or visit www.actioncoach.com/fergalkeane
