Half of the money I spend on advertising is wasted. The problem is that I don’t know which half.” – John Wanamaker (1838-1922)

John Wanamaker opened his first store in 1861 and is considered by many to be the inventor of the modern department store. He was a merchandising genius and a strong proponent of the power of advertising, despite its limitations as a marketing measurement tool.

Word of Mouth vs. Expensive Advertising

Unfortunately, spending money on advertising can feel a bit like throwing money against the wall and hoping that it sticks. Many years ago, I managed marketing for my family’s furniture business and was writing large checks for advertisements that appeared on the radio, TV, and in print. Some of it worked—but most of it didn’t.

Then I did something I should have done from the beginning: I talked to our customers. I asked them how they had found our store. I instructed my salespeople to do the same with everyone who came into our showroom.  What we found was that word of mouth was driving our business.

Marketing Measurement That Matters

With this information, we changed our entire approach to marketing and marketing measurement. We didn’t stop advertising altogether, but we spent our money more wisely and focused our efforts on word of mouth tactics that helped drive repeat and referred sales. To learn more about what we did, watch this video that I created for Grange Insurance Association and its network of independent agents:

Are you talking to your customers? If not, find ways to engage with them in conversation to find out more about how and why they chose to work with you. Also, leverage technology. Your website provides rich information about how people are finding you so take advantage of free tools like Google Analytics.

You can’t make informed marketing decisions without knowing what really drives customers to your business. Combine real world conversations with online analytics and you’ll see solid returns.