How to test whether your marketing is working

You have an amazing idea that people love. The problem is no one knows about it yet. There's a huge number of ways you can promote your business, from PR to digital advertising, but where do you start? How should you invest your limited resources?

In this blog, we look at how to experiment with marketing and figure out what approaches are right for your business. We've broken the process down into seven clear steps and shared expert advice from start-ups, advisers and our own head of marketing.

1. Figure out who your ideal customer is

Start by making learning as much as you can about who you are targeting. Customer personas are fictional characters that represent a section of your audience. They help you understand and communicate what you're trying to achieve. Creating personas is a great place to start.

Oh So Social managing director Katherine George says:

"The first thing I say to everyone is 'you have to know who your customer is'. You have to have realistic customer personas. If you don't know who they are, you don't know how to reach them."

Katherine suggests getting out a piece of paper and working through the demographic details you know (age range, income, location, sector etc.).

You need to have a sense of how you're appealing to them too. For example, are you just talking about product or does the advertising include aspirational elements? In Oh So Social's case, it's selling time management and stress reduction, rather than just social media management.

Try to back up your assumptions. Talk to potential customers about the challenge you're helping them with, how they purchase similar items and what social platform they use. Over time, you want to prove these hypotheses as you test different approaches.

2. Narrow down the channels you're going to test

Time and money are limited when you're launching a business and that's a good thing!

Having few to no resources breeds creativity – you have to be inventive to get stuff done. And it's those inventions that set small business apart from the crowd and build customer loyalty. It also forces founders to be rigorous about product development and marketing.

Having a clear picture of who your customers are helps narrow the number of channels you start with, whether it's investing time in PR or content creation or spending money on advertising.

You might consider uses a three-month period for testing a new platform or approach. That includes a month for trial and error and two months where you know what they're doing and can test properly. At the end of this period, you have information that can help you make sound decisions about how to invest your time and money.

EcoStardust sells biodegradable glitter. Founder Kath Senior tested Google adverts early on and quickly scaled the amount she spent. The key attraction was the intent to purchase; people are searching for something they want to buy.

Kath says:

"I realised it was working well for us and put in a little bit more and a little bit more. It can be daunting when you're starting out to spend money on marketing but it does allow you to track spend day by day and that means you can stop if it's not working."

By the fourth month, EcoStardust was spending about £500 a month on Google adverts. That came with the benefit of having an account manager who could help.

3. Set goals for your campaigns

Try to break down the experiments with approach and your testing of new channels into campaigns, and then set expectations for what you want to achieve.

Enterprise Nation's chief marketing officer Lorna Bladen says:

"We try to give a SMART goal to all campaigns. It's important to be really specific on the ideal outcome. That could be conversions or engagement levels."

SMART stands for specific, measurable, achievable, relevant and time-bound.

4. Make sure you're measuring where sales come from

It's crucial you're measuring the results of these campaigns. It's common to try lots of approaches when you're starting out, but you need to be able to tell what's working.

It's helpful to create a catch-all measurement at the point of sale. Ask where customers heard about the product and make a note. Add a question to your form if you're selling online.

Digital marketing is generally run through your website, and Google Analytics makes it easy to track purchases. Voucher codes are a great way to track the source of sales and provide an incentive for potential customers. This is useful if you're doing print advertising or can't think of an easy way to track the performance of a particular campaign.

Tracking links help and Google's Campaign URL Builder is easy to use. The results show up in Google Analytics. Lorna Bladen gives tracking codes to different team members and creates a leader board to keep everyone motivated.

"We try and create unique landing pages as much as possible. But that's quite time intensive and comes down to the resource that you have."

5. Concentrate on cost per acquisition

It's easy to get distracted by vanity metrics when you start marketing. While it's useful to measure reach and other aspects of campaigns, the most important thing is whether it leads to sales and if those sales are profitable.

Cost per acquisition (CPA) is the amount you spend on advertising to get a sale and it's one of the most important thing to measure. It's worked out by dividing the cost of a campaign by the number of sales – for example, if you spent £100 on Facebook ads and made two sales you have a CPA of £50.

There's brand-building value in people seeing adverts because they may purchase at a later date. However, CPA is really important because it shows the impact on your margin. If you're product costs £200 and your Facebook CPA is £50, it may have wiped out your profits or even meant you lost money on the sale.

Katherine George says:

"I'm a big believer in conversions. Make sure you get some return. On social, people get very caught up on vanity metrics. It's great to have these big figures but you're better off having a smaller number of followers that will actually buy things from you."

CPA can be scary when you first start measuring it. It takes time to figure out what channels work and improve both your advertising and the experience the user has once they click through to your website. But keep a keen eye on CPA, test and improve.

If you know that after factoring the cost of acquiring the customer a channel leaves you with a sufficient margin, it's an opportunity to scale your activity – congratulations!

6. It doesn't have to be scalable at first

Paying to expand your audience through Google or Facebook means convincing people who haven't heard of your business to buy something. This is particularly tricky when you don't have the experience to optimise your website and might not have solidified your USP.

Don't underestimate the value of your existing network. Whether it's friends and family, a sports club or email list you have for a related project, existing contacts have a level of trust that makes them easier to convert.

The combination of these two factors means it's worth stressing the value of doing things that feel quite manual or time-consuming and won't work at scale. Running a Google ads campaign is less intimidating than pounding the pavement to sell in person, but the latter's free and might be more effective.

7. Start experimenting and keep learning

EcoStardust's Kath Senior learned to use Google Ads by watching YouTube videos, reading articles and taking advantage of Google's resources. She advocates experimentation and stresses that it's low risk.

"I have daily limits on everything. You learn from it all, even the mistakes. Just try and make those mistakes fairly cheap."

It's worth remembering that everyone goes through a period of testing before they find the approach and channel that they can scale.

Katherine George adds:

"Don't beat yourself up if it doesn't work. That's what tests are there for. Organic growth sucks. It's slow and painful but it's worthwhile because it's people who are genuinely interested in you.

"Don't compare yourself to other people. You don't know if they've bought loads of followers or the conversion they get. Do what you do best and screw the rest."

Relevant resources

• Why creating buyer personas is so important to a new business

• How to create a low-cost marketing strategy for your small business

• How to create a small business marketing plan