Do you want to make your business more profitable in 2005 than it was last year? A simple marketing evaluation system will help. Marketing evaluation can be your business thermometer. A thermometer measures temperature; it doesn’t control the temperature. It indicates whether the heating or cooling elements are working properly. If the room is too warm or too cold, you make adjustments to remedy the situation.
By regularly measuring your sales and profits, you will be able to see whether your marketing efforts are working properly–whether you are on track to reach your objectives and where you need to make strategic or tactical adjustments–in time to make any necessary changes.
How to Measure Your Results
Begin by dividing your annual goals–in terms of units and/or dollars–into quarterly objectives. Then at the end of each quarter, ask yourself a few questions: Are my sales on target? If not, why not? What changes must I make in the next quarter to become more successful and reach my current or revised target?
Finding the answers is a two-step process.
Step 1: Conduct a Quantitative Audit
A quantitative audit is objective. It involves comparing numbers that were forecast with numbers actually achieved, and it is easy to do with a quarterly spreadsheet, as shown below. In this case, the annual forecast of 4,000 units is evenly divided into four quarterly goals of 1,000 units to Distributor A and Wholesaler A. In other cases, forecasts might involve more than one wholesaler plus various kinds of bookstores, nonbook stores, libraries, and so on. Whatever the channels, if actual sales are below forecasts, you must either increase your next quarter numbers accordingly to reach your annual goals or adjust those goals.
Here is a form for tracking unit sales on a quarterly basis (r
= “difference”; YTD = year to date). You can use the same format to track dollar sales.
Actual First Quarter Unit Sales vs. Unit Sales Forecast for Title A
1Q 1Q YTD YTD
Forecast Actual r
% Forecast Actual r
Distributor A 1000 900 —100 —10% 1000 900 —100 —10%
Wholesaler A 1000 1100 +100 +10% 1000 1100 +100 +10%
Actual Second Quarter Unit Sales vs. Unit Sales Forecast for Title A
2Q 2Q YTD YTD
Forecast Actual r
% Forecast Actual r
Distributor A 100 2000
Wholesaler A 900 2000
Step 2: Conduct a Qualitative Audit
Your objective analysis should show you where you are falling short in reaching your goals. It may also point out that while unit sales are on track, revenue is below forecast, and some invisible culprit may be interfering with your financial success. Use the questions below to identify and respond to negative forces.
- Do you have a written marketing plan?
- Is your plan written in a form that makes implementation easy?
- Have you identified and defined your market segments carefully and completely?
- Have you developed an effective marketing mix for each target segment?
- Did you budget enough resources to accomplish your objectives?
- Did you forecast sales accurately? (For more information, see my article “How to Mine Your Own Business” in the April 2003 PMA Newsletter at www.pma-online.org.)
- Do you have enough people–and the right people–to implement your plan?
- Are your objectives stated specifically enough for you to measure performance? (A goal like “Increase sales” does not lend itself to accurate measurement.)
- What is happening to the size, growth, and geographical distribution of your markets?
- Have the needs of your customers changed?
- Have any new competitors entered the arena? If so, how are their products, distribution, pricing, and promotion different from yours?
Product development factors
- Is your current product line appropriate for your objectives?
- Which products should be phased out? Added? Changed?
- Are you acting as a partner with your distributors, communicating with them regularly?
- Do you have adequate coverage in your target markets?
- Do your pricing objectives and strategies suit market conditions and your competition?
- Are your discounts and incentives sufficient to motivate your distribution partners?
- Have you made the connection between your prices and the value of your titles clear to prospective customers?
- Are you communicating the right message to the right people in the right ways (publicity, advertising, sales promotion, and personal selling)?
- Have you budgeted sufficient funds for promotion?
Interpret Results and Make Changes
Simply knowing what is wrong is not enough, of course. To correct the situation, you may need to change your marketing efforts for the remainder of the planning period. Do not be too quick to make adjustments, though. Wait until you have adequate information that you have analyzed sufficiently.
Unless you see a large problem, begin by fine-tuning your existing actions. For example, if your first-quarter unit sales are at forecast but your profits are below what you expected, you may have a pricing problem. Perhaps your price incentives were a little too aggressive and need to be trimmed.
Maybe, however, you are not reaching your objectives because they were unrealistic. Was your plan ill conceived or poorly implemented? What specific weaknesses might have caused your shortfall? Poor product design? Bad timing? Unrealistic scheduling? No differentiation from competitive titles? Too little promotion? Try to pinpoint a cause or causes; then try correcting any problems and measure again to see if your changes worked.
It does not make good business sense to continue doing the same thing but expect different results. If what you are doing works, do more of it. But if what you are doing doesn’t work, try something else. And you can know whether it’s working if you measure your progress each quarter.
Brian Jud is the author of Beyond the Bookstore (a Publishers Weekly book), The Marketing Planning CD, and a series of booklets, “Proven Tips for Publishing Success.” You can reach him at P.O. Box 715, Avon, CT 06001; 800/562-4357; email@example.com; and www.bookmarketing.com.