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7. No Source Code Tracking

Let’s say that you own a small retail store, and want to know what marketing is working to get people into the store to buy. You know you need to spend some money to drive traffic. But where is your money best spent? It’s easy to spend money. But in a tight economy, spending it wisely and effectively can be a major competitive advantage. The real answer is that I can’t tell you where you should spend your advertising money. I’ll be the first to admit that I don’t have all of the answers. (That’s not a claim I’ve seen said much during this crazy political campaign.) But I do know how to find out, and source code tracking is a key tool.

What is a source code? It’s a way that you can tell where a customer came from by putting a code that contains the source of the marketing or advertising campaign. In the online world, it’s easy to know that a customer who purchased a product searched on a specific search term in Google. For example: personalized url. In the direct mail world, you often use special discounts or offers (such as 10% off or use this coupon) so that you can track and measure what’s actually driving people to buy. Or, you can use a special link in a printed piece, such as www.customerparadigm.com/sourcecode that allows you to know where they came in from on the site.


Or, you can use special trackable phone numbers that allow you to track and measure specific advertisements, and then forwards the call to the appropriate person automatically. Our new office phone system allows us to do this very easily, and we’ve been pleased by the results (I ordered an extra 50 phone numbers so that we can test out this ourselves). The goal with source code tracking is keeping a spreadsheet or database with all of your marketing and advertising expenditures. And when a new sale is recorded, make sure that the source code is captured into the profile. There are ways to do this in Quickbooks, so that you can run reports. The end result of sourcecode tracking is a customer acquisition cost: how much did it cost you to bring in a customer from a specific marketing campaign?


The math is easy. Simply divide the number of customers you brought in from a specific source by the amount of money you spent on the campaign. If you spent $1,000 on a direct mail campaign (postage, printing and design), and you had 50 people bring it into the store, your cost per customer acquisition is $20 per person. And if those 50 people spent an average of $300, then you know your direct mail campaign brought in $15,000 in business. (My advice: do more campaigns like this.) Compare the direct mail campaign with a print ad in a community newspaper. You spent $425 running the ad six times, but only got 1 customer who spent $150. (You tracked it with a similar coupon.) Your customer acquisition cost in this second example is $425, and the total revenue is $150. You lost money with this medium. (My sage advice: don’t do more campaigns like this one.) Depending on your line of business, the sample customer acquisition costs may seem too high or low. But remember: it’s not always about the one-time purchase… factor in the lifetime customer value (how much they are likely to spend during the time they are a customer). The other thing to keep in mind is that it often takes multiple interactions (6-12 on average) before someone turns from a browser into a buyer. So don’t discount the cumulative effect advertising and marketing has on your target audience. There’s even ways to account for this in the more sophisticated financial models we create for some of our clients.

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