One of my favorite business bloggers is Seth Godin. Frequently on Saturday’s I like to pick my favorite post from Seths_Blog that week and push it out to my readers with my commentary. One of my favorites that I bookmarked long ago was “Getting Confused About Causation and Correlation.” This has particular interest to me when it comes to small businesses and how they analyze their marketing results effectively. Here’s Seth’s insight:
Have you noticed that in most cities, every time there are lots of umbrellas, it’s raining?
From this analysis, the obvious way to make it rain is to be sure that everyone has an umbrella, preferably a black one, since that seems to be the kind that’s most visible during big storms. Read more…
Correlation or Causation?
As a business coach working with owners of small businesses, I see a lot of “faulty” analysis. In fact, I’ve been guilty of this myself. We see a correlation and too quickly draw a conclusion about cause and effect. Where I see this most commonly is in analyzing the small business marketing efforts.
I encourage my clients to track and measure everything, especially when it comes to marketing. You must market your business successfully or you will not survive – we all know that! But we frequently spend money and time on a variety of advertising and marketing efforts without effectively analyzing the results. When we do attempt some marketing analysis, it is not uncommon to draw the wrong conclusions because we do not see the difference between “causation and correlation.”
How to Analyze Your Marketing Results
Let me recommend that for every marketing dollar and marketing activity, you follow these steps:
- Determine up front what your goals and expectations are for this particular marketing activity. It doesn’t matter if it is a print advertisement, a networking event, or a Facebook Ad. Be clear on what you want the outcome to be.
- Determine up front how you will track and measure your effectiveness at meeting the goal. Do you want a certain number of phone calls within a specific period of time? Do you want a certain number of appointments? Do you want a certain CTR? Know your goal and know how you will measure it.
- With your goal in mind, execute on your marketing activity as strategically as possible. If you’re writing copy, write it as strategically as you can. You may even consider hiring a copy writer to either write or edit your work. If you’re sponsoring an event, think through the process for how people will connect it to your company and move you toward your goal. There are over 100 ways to marketing your business, but if poorly executed, none of them will work for you.
- Educate yourself. After the marketing effort is complete, measure your results and identify at least 3 things you can learn from it. This is important because we all make mistakes. Without intentionality around learning we typically continue to make the same mistakes, getting the same mediocre (or worse) results. As a business coach I tell my clients that every marketing activity at best should be a lead generator, and at worst, should be an educational experience! Ideally, it should be both!
The bottom line is this: Make sure you’re tracking and measuring your marketing activity. Make sure you see the difference between causation and correlation. And make sure you get a little bit smarter every time! I provide coaching services to small business owners in Sugar Land, Katy TX, and the Houston area of Southeast Texas. My vision is to see our business effectiveness increase every year. One way that happens is through good marketing analysis. Contact me today so we can determine if your marketing is actually generating the results you need.