Tuesday, October 09, 2007

Measuring results

Just how do you measure the results of your marketing efforts? It depends on the circumstances.

About two weeks ago, a new McDonald's opened in town. They are one of my clients. They had a soft opening on September 27th, and then they will have their official Grand Opening Celebration this coming Saturday complete with Marching Bands, a radio remote broadcast, a ribbon cutting ceremony and the like.

Whatever happens this Saturday will be fine, we already had a successful opening. The owner gave away a years worth of Quarter Pounders to the first 50 people that showed up on September 27th. We promoted it on the radio.

I stopped by at 7:15 that morning to see how things went when I was told what happened while I was sleeping: 4:15am, the owner-operator comes in and there are a dozen people waiting for them to open the doors at 5am! By 4:45am there are 70 people in line!

Let's measure the results: 50 1/4 pounders retail at 3 bucks each. That's 150 dollars times 52 weeks = $7800. Actual food cost is about $2500 or less. Let's say that the only customers they get from the promotion is the 70 that showed up before they opened their doors. Lunch customers are likely to visit an average of twice a week. Let's presume they spend $5.00 each trip. The cost of food to McDonalds is about $2.00. So do the math and there is 6 dollars profit times 52 weeks times 70 people = $21,840 profit for an investment of $2500. Even 1/2 that amount is quadrupling his investment!

Note that this investment is over the course of a year, and that the buying cycle repeats itself every 3 or 4 days.

This afternoon, I spoke with a friend of mine that asked me what a commercial cost on my radio stations. I called him up and we met and discussed the real issues. He had run a newspaper ad that cost him between $700 and $800 each time he aired it. He thought it was expensive. As we talked, we discovered that the paper gave him a deal where it ran the ad Saturday (free), Sunday (paid), and in a weekly employment supplement (free) and posted it on their website for 30 days each time he paid.

The first time it ran he got about 30 inquiries, from which looks like he will get 2 new employees. The second time he ran, he got about 10 inquiries, from which looks like he will get 2 more new employees. What's the bottom line here? So far, his experience with the paper is it costs about $375 to find a new employee using their method. Is this a reasonable cost? Don't know yet. But at least we know how to measure the results. And why did the first 30 inquiries only net 2 employees, while the next 10 inquiries also produced 2 employees? Which was more effective? I believe the second, because while the end results were the same, the second was more efficient, saving time and expense of screening out those that did not qualify.

I am in the process of consulting with others in the advertising world in my town to see what they might have to offer that could produce better net results for the dollars he has available to spend, and I also have a proposal that I believe can work, using my radio resources too.

Your thoughts and comments are welcome...

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