Think Big, Act Small #4. Learning Early, Inexpensively and Correctly: the Role of Testing & Measuring in Marketing



As your marketing shifts from planning to execution, it’s important to structure tests to understand how well your marketing is performing, and to learn from it.  While the old adage “Half of my marketing isn’t working, I just don‘t know which half” often rings true, today you have access to more and better data to track the performance of your marketing and ideally the return on your marketing investment.  The important thing to do is to design tests, set success criteria to measure and collect learnings to inform future marketing initiatives.  By borrowing key elements of the marketing process from leading consumer marketing companies, you can make your marketing work harder for you.  Also, because as a start-up you are likely to be more nimble, this enables you to quickly invest in higher return marketing, vs. spending too much in vehicles that aren’t productive, which is a considerable advantage in the marketplace.

  • Set up “test and learns.” In reality, everything you do as a start-up is a “test and learn.”  The important thing, though, is to put some structure around the work to understand what resourcing you should commit to it and, ideally, what you are getting out of it.  After all, most start-ups are not “idea-constrained”, they are “dollar-constrained” or “resource-constrained.”  As such, you have to ultimately make choices about whether to invest a dollar or an hour here or there, you generally don’t have the luxury of doing “everything” and if you do, few have the luxury of doing everything well!  For each marketing tactic you deploy, outline a simple test and learn strategy.  Note the: a) objective for using the tactic, b) what specific things you are looking to test, c) how you are going to measure success and d) benchmarks for what you anticipate performance to look like.  For example, if you are using Google AdWords, the objective would be “to drive traffic to our website,” the testing might focus on different advertising directions and keywords, and the success measures could include a) website traffic, b) cost per click and c) sales generated via AdWords.  Likewise a request for sampling program might have an objective of trial and compare the results of redemption rates from various request executions.  In addition to applying this logic to core tactics, it’s important to identify one or two tests to execute that have the potential for breakthrough to push your marketing and marketing learning forward.  For decades people have cited the 3M “15 percent” rule (where employees allocate 15 percent of their time to self-managed innovation projects); think about a similar logic, it terms of budget or hours that you want to put against marketing innovation in your plans.  You want to make sure that core tactics are sufficiently funded, but it’s important to also have a “test and learn” budget for marketing innovation so that your marketing plan is not merely “tried and true” and that you’re also making reasonable investments to prove out “unknowns.”
  • Set success criteria. Setting success criteria for marketing programs is key because it moves the focus beyond tracking activity to linking marketing back to business   It’s helpful to track your Facebook likes, Pinterest followers and tweets (and retweets) as a gauge of interest in your offering.  And marketing analytics firms like SumAll can give you benchmarks on social media to see how you stack up.  But the important thing is to not just monitor activity, but to link these back to sales to understand what percent of website traffic, and ideally sales, is driven off of search vs. Facebook vs. Pinterest, etc.  Ideally, apply the same rigour and process across online and offline tactics.  This will be tricky and imprecise, but it is important to start to get a sense for what efforts are fuelling your business.  And on the point of marketing innovation, it’s critical to apply the same logic of success criteria and tracking to these programs in order to enable decisions about where to flow funds to in the future.
  • Track learnings to inform future marketing initiatives. The “learning loop” goes beyond just tracking results and performance vs. success criteria to include understanding how you can improve execution the next time.  Do you understand what drove the success of the execution?  Could the communication have been optimized?  Was the creative compelling?  Did consumers understand the offering?  Likewise, with the execution complete, do you have hypotheses about how to eliminate waste and lower cost?  How well were we reaching the target consumer?  Can we further improve targeting?  Reduce costs in design or execution?

Ultimately, this process of setting up test and learns, defining success criteria and tracking learnings is key for ensuring marketing success.  In the short term, it will help you get the most return on your limited marketing budget.  In the long term, it will strengthen your marketing capabilities by using past learnings—good and bad—to inform and strengthen future marketing initiatives, and over time you should expect to see your marketing return on investment, or sales per dollar invested in marketing, increase.


Note: This article builds on a series of columns about marketing learnings and processes that start-ups can leverage from big companies that include “Understanding Your Target Consumer,” “Defining What Your Business Stands For,” and “Selecting Tactics for Your Marketing Plan.”

Image credit: CC by DaveBleasdale

About the author: James Black

James Black is a marketing and insights consultant and freelancer based in New York.  He has 10+ years in marketing and sales experience across P&G, McKinsey and L’Oreal.  Most recently, he founded and led a retail start-up, Black & Puryear Ltd., in the U.K., where he served as Director and Chief Curator.  At L’Oreal, James was head of shopper insights, where he identified and shaped shopper insights to drive greater connection between consumers and L’Oreal’s portfolio of beauty brands across channels.  At McKinsey, he worked in the firm’s Marketing & Sales practices, advising clients on marketing topics across B2B, packaged good and retail clients.  At P&G, he working in both traditional brand management roles as well as in the company’s marketing centre of excellence, studying best practices.  He has an AB from Harvard in Government and an MBA from the Darden School of Business (University of Virginia).

You are seconds away from signing up for the hottest list in New York Tech!

Join the millions and keep up with the stories shaping entrepreneurship. Sign up today.