05 Jan Don’t Panic! Practical Tips For End Of Year Analytics
Okay, here we go, it’s about to get a little nerdy in here. This blog is mainly aimed at services marketing world, particularly to the architectural/engineering/construction industry. But don’t let that stop you from reading, there some good nuggets here for everyone.
Marketing analytics is a powerful tool when planning a strategic path for your firm. Seeing it’s the end of the year, and time to run our marketing analytics, here are some of guidelines that I hope will be helpful.
Statistics can be a wormhole. If you are a data nerd like me, it’s good to stay clear on what data is really needed to make strategic decisions, and what data might just be “interesting to know.” Unfortunately, I consistently fail on this basic rule…but you know what they say, knowledge is power!
Like any good data-driven initiative, the most important thing is consistency. Statistically, everything should work out if you use the same kind of data. Statistics and analytics are complex, below are some simple ideas that might help your process.
1. Money in and money out. When comparing resources your firm spent on initiatives, I only look at real dollars coming in and going out. For money coming in, this is net revenue brought in from a project (take out monies distributed to vendors and other external expenses). Money going out should be hourly rate (not billable) – your HR cost need to go into it’s own HR bucket. It’ll make the numbers cleaner and more reliable.
Sample go/no go. The 7% represents the max number we were still able to recoup marketing costs through project fees. Anything else would be a loss. These percentages will change depending on your firm.
2. Include marketing staff salaries. It’s not uncommon for me to hear my clients say about marketing time: “it’s all overhead so it doesn’t matter.” To be frank, it does if you want to be strategic about your marketing dollars. You’ll want to understand how you are spending time so you can better plan and strategic choices for the following year.
3. Break it down. After you collect your data, look at all elements. In addition to general costs for pursuits, try breaking out per phase (research, proposal, interview, etc.). This will help establish costs for future go/no go’s. For marketers and owners, this kind of data comes in handy when someone in the room tries to convince you the pursuit will only be $10,000 when the three previous similar projects cost about $50,000. I’m not trying to be a dream killer here, but in my experience numbers don’t lie. And, I totally get it, statistics aren’t everything.
4. Break it down, again. One more level, the “general marketing” number. First thing, marketing departments, if you haven’t taken back this number, now is the time. Next, break down costs into buckets like business development, awards, photography, conferences, etc. Then you can plan your budgets based on the strategic plan (or just what you think is probably, loosely, the strategic plan). Repeat this mantra, “pie charts are my friend.” If your accounting systems haven’t been set up for this yet, no problem – set things up now for 2017.
5. Set your goals. Looking at your strategic goals, decide how much money needs to go into each bucket. If you’d like to hit a 12% marketing cost to revenue (so sad, for most firms to be competitive, gone are the days of the dreamy 7-8%), it’s important to decide how much you will spend on different kinds of pursuits. I usually break things down into three different areas: proactive, reactive, and administrative. Proactive examples are awards, conferences, and business development; reactive examples are proposals and interviews; and administrative are database maintenance, website updates, and social media upkeep.
Lastly, just as an added note: I would recommend your “hit rate” be done by revenue, not number of wins/losses. That just skews that data and is completely useless
Analytics, especially for architectural, engineering, and other service firms, can give a strategic edge. If you are a data nerd like me and have some additional recommendations (or would just like to nerd out) I’d love to hear from you! If you’d like help with your analytics, reach out, I’m here to help. I wish you a very successful and profitable 2017!
In a dream world I would have an entire book of analytics tips and tricks to offer you (yes, I’d totally love to write a book about statistics). Sadly, it’s not something I have, however, HBR have a couple of books on analytics, I haven’t read them, but they look very promising. https://hbr.org/product/the-analytical-marketer-how-to-transform-your-marketing-organization/14251E-KND-ENG