Using Statistics in Marketing
by John Eberhard

How do you make decisions in marketing? How do you know whether a campaign is working or not? How do you choose between two ads that are running? How do you know whether you’re getting any benefit from social media? How do you know whether changes you made to your web site are working?

The answer is statistics. The way you know that a campaign is working is that it is producing an acceptable level of leads and/or sales. When choosing one ad over another, you choose the one that got more responses or sales. And for any other decisions one makes in marketing, you should make those decisions based on statistics.

This is common sense to me and I have been operating this way for over two decades.

For all the marketing services I deliver to clients, I have worked out statistics to measure how effective the actions are and how well they are working. If the statistics show that everything is working great, I don’t change anything. But if the statistics show poor results, I roll up my sleeves and figure out what changes I need to make to get the statistics moving up again.

I recently had an experience showing that this is not necessarily common sense for everyone.

I had a client for whom I was managing pay per click advertising on Google AdWords. I managed this for the client for two and a half years.

There were several ideas that this client had, which went completely against what the statistics were showing. He kept telling me to do things that clearly would have made the number of Google AdWords leads go down. I would argue against the proposed action, citing statistics, and he usually gave in. But he did so reluctantly and I could tell that the fact of the statistics and what they showed did not really change his ideas.

Where did he get these ideas? What were they based on? Why did he hang onto them so tenaciously in the face of contrary facts? I don’t know.

Finally we stopped working together a few months ago, and I have looked up his campaigns a few times since then and see that he has completely abandoned the successful actions that I implemented that we argued about. Obviously it is his company and he can do what he wants.

But this begs the question: What should a business owner base his marketing decisions on? The answers are:

  1. He should base his marketing decisions on statistics; thing like response level, number of leads, number and dollar amount of sales, from a given marketing action.
  2. If statistics show that a particular marketing action works, but he has some personal dislike of the action, he should discount his personal feelings about the matter (as long as the particular action does not have a destructive effect like showing the company in a bad light). He should continue that marketing action as long as it is working.
  3. If a particular marketing action is not working, but the business owner really likes it or thought it was particularly brilliant or clever or it was his idea or whatever, he should put his personal feelings aside. That marketing action needs to go.

I read somewhere that marketing requires a sense of humility. I think what that means is that if you personally came up with an idea and really like it, but after implementation it doesn’t work, you need to can it. You can’t base your decisions on ego.

Next week I will talk about specific statistics one should use to measure various marketing actions.

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