Testing and Measuring - Part 2
Testing and Measuring - Part 2
This then leads to the balance of the phrase... testing and measuring. There is little point in going to the trouble of conducting a test in the first place unless one follows through with some type of analysis of the results. Imagine taking that new car out for a test drive and not paying any heed whatsoever to the quality of the ride, the noise levels and the engine performance. Not reasonable...is it? You would instantly compare this new car to your old one or other new cars you were considering... wouldn't you? You would have your own form of measurement to compare the car with others. Your taste is a form of measurement when you try those samples in the supermarket. If you lost your ability to taste... why bother trying the sample at all? I believe you get my point!
Now, back to our business analogy... there is no point in testing the outcome of any type of marketing campaign with no measurement of the outcome. Careful measurement and analysis of the results of a test campaign will provide much needed information on which to base decisions. The results of the measurement will quantify the success of the test campaign. The results can then be extrapolated to test the soundness of the campaign. Example... a test mailing to 500 households yields 10 responses. Each response results in an average sale of $150 with a margin of 40% that adds $60 to the company's profits which is $600 overall ($60 x 10 responses). Let us assume the overall cost of the mailing is $1 each or $500 in all. The company then made a net profit of $100 ($600 profit less costs of $500). This campaign appears to be a winner!
This then leads to the balance of the phrase... testing and measuring. There is little point in going to the trouble of conducting a test in the first place unless one follows through with some type of analysis of the results. Imagine taking that new car out for a test drive and not paying any heed whatsoever to the quality of the ride, the noise levels and the engine performance. Not reasonable...is it? You would instantly compare this new car to your old one or other new cars you were considering... wouldn't you? You would have your own form of measurement to compare the car with others. Your taste is a form of measurement when you try those samples in the supermarket. If you lost your ability to taste... why bother trying the sample at all? I believe you get my point!
Now, back to our business analogy... there is no point in testing the outcome of any type of marketing campaign with no measurement of the outcome. Careful measurement and analysis of the results of a test campaign will provide much needed information on which to base decisions. The results of the measurement will quantify the success of the test campaign. The results can then be extrapolated to test the soundness of the campaign. Example... a test mailing to 500 households yields 10 responses. Each response results in an average sale of $150 with a margin of 40% that adds $60 to the company's profits which is $600 overall ($60 x 10 responses). Let us assume the overall cost of the mailing is $1 each or $500 in all. The company then made a net profit of $100 ($600 profit less costs of $500). This campaign appears to be a winner!
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