The Business Owner Who Lost Track of Her Sales Note: The names of the people and businesses in our case studies have been changed to ensure the privacy of the people involved, but the details, recommendations and results are based on actual events from our files. In the early nineties, a small business owner, Mary, contacted us to ask for our help. She said that she was spending a lot of money on newspaper ads to promote her small business, but that she didn't feel like she was getting very much return from her investments. After one meeting, it was obvious what was wrong. While she had an excellent service, and was getting rave testimonials from her current customers, her marketing strategy had several major flaws that were preventing her from attracting significantly more customers and sales. She wasn't tracking her advertising results Mary was placing ads in over 10 different publications each month, but had absolutely no idea which of those publications were producing results for her and which were not. Since she was getting very little response anyway, we knew that most of the publications were producing nothing for her. She was not only wasting a great deal of money, she was also losing a lot of money from lost sales. "Mary," I said, "how would you like to spend a lot less money then you are now, but get a lot more sales?" "That would be wonderful," Mary replied, with a big smile. "But how can I do that?" "You can do it easily," we told her. "All you have to do is determine exactly which of your ads are producing results for you and which ones are not." "Then you will just stop spending the money on the losers, and put more money into the winners. It will cost you less, but you will get a lot more results by focusing more of your money where it will produce the most sales." "But how can I possibly determine which ads my customers are responding to?" she asked. "We get calls all week and the ads I use are in lots of different papers at different times. It seems like it would be very difficult to keep track of who's responding to which ad." "It may seem like it would be difficult and confusing, but really it's not," I assured her. "Mary, the solution is simple," I explained. "All you have to do is put a little tracking code in each ad. Then as your prospects and customers respond to the different ads, you just ask them for that particular code." While there are a number of effective ways to code your marketing pieces, we showed Mary the easiest and most appropriate for her situation. We simply had her put a different, fictitious Extension Code next to her phone number in each ad. For instance, Newspaper A's Extension Code was Ext. 13, Newspaper B's code was Ext. 14, and so on. Next to her phone number we told her to put the words, "Ask for Extension 13," or "Extension 14," etc. Mary was still skeptical. "Is it really necessary to know exactly which ad a prospect is responding to? Seems like extra work, and I don't know of anyone in my business who does that." We explained that it was vital to her success to know what was working and what was not. We asked her if she had 10 paid sales people on her staff, would she pay them all every week without knowing which ones were producing for her and which ones were not. "That would be foolish," she said. "I would have to know which of my sales staff were producing results. In fact, I would want to reward the ones that were selling the most so that they would continue to do so." "I'm a small business. I couldn't afford to pay people who weren't earning their salary." "Exactly," I replied. "Your ads are like your sales staff. You pay them every month to do a job for you, and you need to know which ones are worth their salary and which ones are not." When you don't track, you lose more than just the cost of the ads We also explained that when you don't know which ads are working, you're not only losing the money that you spent on the ads themselves, you're also losing the sales that you would have received by investing that same money in a profitable ad. This can quickly add up to thousands of dollars in lost sales. Mary was still not completely convinced that this was necessary--she was hoping that our solution would be more "creative." She thought she needed more sophisticated and clever ads. We explained that before we even looked at the content of her ads, it was vital that she establish an effective way to track her marketing results. Mary agreed to give it a try. The tracking system reveals the truth about Mary's ads Over the next month, when someone called from each of her newspaper ads, Mary simply asked them for the Extension Code and wrote it down on her special prospect call sheets that we provided to her. This way, at the end of each week, she knew exactly which ads were producing callers and which ones were not. After tracking her ads for just one month, Mary was shocked to discover that out of the ten publications she had been using for the past two years, only one of them was producing any responses for her at all. Mary had mixed emotions. She was extremely pleased that she now knew which ads were a big waste of money, and which one was a winner for her, but she was frustrated to think of all the money she had wasted over the past two years. "If only I had known about that simple tracking code system when I started," she said, "Just think of how much money I would have saved, and how much bigger I could have grown my business." We told her that most small business owners never determine which of their marketing efforts are producing for them, so she was way ahead of the game. She could now leap past her competitors. "I'll never use another marketing piece without a tracking code," Mary promised. "It's really very easy to do, once you accept the idea. I don't understand why more business owners don't track their marketing. Seems like a foolish and very expensive mistake not to." Mary was right. It is foolish for business owners not to track their marketing efforts, but few do it. You can easily tell if they are tracking, by just looking at the bottom of their ads. If you don't see an Extension Code, a Department Number, or something like "Ask for Sue, Operator 87, or Catalog 132, etc.," chances are, they aren't tracking. You can't guess your way to profit. If you're not tracking, you're losing thousands of dollars. It's that simple. We congratulated Mary on her new system for tracking her marketing. Now she had a system that would allow her to pick and choose her marketing efforts based on specific results and facts, not just guesses and opinions. Now that Mary had an effective tracking system for her marketing, not only could she determine which publications were the most profitable for her, but she could also test improvements in her ads--better headlines, better offers, etc.-- and determine exactly which improvements produced the most results. By simply using an effective tracking system, Mary was well on her way to significantly growing her business. 
Case Study Review Marketing Problem #1 Not using an effective tracking system: Your marketing decisions should never be based on guesses or opinions. They should always be based on facts. In business, those facts are numbers. If you don't know if an ad that you paid for produced any results for you, how will you know if you should pay for it a second time or a third time? Don't be fooled by media reps who may tell you that you must run your ads over and over again for them to start producing results. It isn't true. An effective ad begins producing results immediately. Mary wasted thousands of dollars by paying for newspaper publications that produced nothing for her. She also lost thousands more by losing the sales she would have gotten by investing her money in marketing that produced results. Spending money blindly is a sure way to failure. Marketing Solution #1 Use a simple and effective tracking system for all of your marketing efforts: Don't make the mistake many businesses make of just asking your prospects and customers, "Where did you hear about us?" This question rarely tells you what you need to know. For one thing, most people don't really know what you mean. They may have heard about you from many sources over the years--your sign, a friend, a yellow pages ad, or they may have been a customer for years. What you need to know is exactly which ad, flyer, post card or direct mail letter they are holding in their hand right now. By simply using a code next to your phone number, you just ask the caller for the code and now you know exactly which marketing piece got them to call. There are lots of other effective systems to use for tracking the results of your marketing, but this one is the easiest and most universal.
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