Retailers may think they can tell how successful their advertising is just by the number of people that come into their store. In some ways they are right, but they may not know if their advertising is cost effective. Retailers need to know what it costs to get each customer into the store. They also need to know if it was an advertisement that motivated people to come to the store. A retailer may run an ad and have wonderful results. Yet when the retailer runs a similar ad at another time, the results may be minimal. Tracking takes the guess-work out of advertising. It enables retailers to see real, solid results and know their advertising is working. Advertisers want to know if they are making a profit -- enough to cover the cost of advertising as well as products -- or if they are breaking even on the advertising. With tracking, it is possible to determine whether to repeat a campaign or to try a new one.
An Enticing Offer
When sending a direct mail coupon, current and prospective customers must come into the store to use it. The retailer knows that the advertising is motivating these people to come into the store, but the retailer also needs to know if the advertisement is profitable.
Vital Information
When redeeming a coupon from a current customer, simply write the amount of the sale on the coupon at the time of checkout. This is a good time to check the store's database to update information as it changes. Have employees initial the coupon.
When using a cooperative direct mail program that sends a mass of coupons to certain ZIP codes, it is important to indicate if the customer using the coupon has been in the store before. Include a check box on each coupon or circle the amount of the transaction. The circle always indicates that the customer is new. Get the new customer's name and address for future mailings and have employees initial the coupons.
Not all customers use coupons, but for those who do, the coupon may be the boost they need to come back to the store. Just because some customers do not bring in the coupons does not mean they were not motivated by the advertisement. Some people simply do not use coupons. Others will ask when your next flier is due out because they will be watching for it.
Crunching the Numbers
The information on the coupon is only worthwhile when compiled in a form that means something. To compile this information I have created a form called a Coupon Tracking Sheet. At the top of this form list the date the mailer was sent, the number of mailers sent, the expiration date of the coupon and a name for or description of the mailer. The rest of the page should consist of at least three columns. The date is entered in the left-hand column, the middle column is for the number of coupons received and the last column is for the dollar value of the purchases for that day. I add two columns that I use to keep running totals. This is a very basic sheet, but it provides the necessary information. The bottom of the tracking sheet should list the totals for each column. This form tracks the number of coupons received as well as the total purchases made as a result of the promotion.
Include a place at the bottom of the form to write the total cost of the advertising for this event. This amount includes type-setting costs, printing costs, paper and envelope costs, postage and any other expenses that went into the advertisement. Now compare the total cost of the advertisement to the gross sales generated by the ad.
The gross sales amount includes the cost of the products, and it is important to know whether 40 to 50 percent of the gross sales is gross profit. Determine this percentage, multiply it by the gross sales and subtract the total advertising costs to determine if the ad is successful.
Another tracking number that retailers should be aware of is the percentage of coupons redeemed. This should also be placed at the bottom of the tracking sheet. The percentage redeemed will vary according to whom the store is mailing. This percentage is determined by dividing the total number of pieces redeemed by the total number mailed. When mailing to current customers look for a return of 2 to 10 percent of the number of mailers sent. When mailing to a general list the store may expect a response rate as low as .01 percent to a high of 1 percent. These percentages may seem low, but the purpose of a general list is to acquire new customers. Once these customers respond, they should be placed on the store's customer mailing list.
The Big Event
If the store has determined that the coupon is worth using again, the next step is to consider how to improve the results next time. It requires more work to track results, but determining the success of a campaign is worth the effort. A successful campaign will put energy back into the business as well as money in the bank.
Another tracking sheet is an Event Success Sheet. This is used for particular sales events such as anniversary sales, holiday sales, and any other sales event the store creates. This sheet should include information such as the starting and ending dates of the sale, the number of fliers that were sent and other methods used to advertise the event. Decide whether the event was successful and note why or why not and list ideas that might have made the event more successful. Decide if the event should be repeated. If it did not generate income this time, the reality is that it will not generate income a second time.
These are only a few of the questions the Event Success Sheet will answer. This should provide the general idea of what to record. Keep this information in a notebook or file folder, where it can be easily retrieved.
Tracking advertising takes time, but in the long run it will save time and money by enabling the store to know where to spend the time to make money. Advertising is worthwhile when it works.
