Every business aims to get its brand and services to its audience and expand it as well in the process, which is where the marketing departments of virtually EVERY cooperation come in.
And since marketing is a costly process that the company has to pay for A LOT, in the hopes of better profit and gains, it is something they will pay attention to and meticulously plan as well.
If you’re planning on studying marketing and pursuing it as a career but you are bad at math, you might have wondered if marketing involves math.
Well, the bad news is marketing DOES involve math- and is a very important part of it as well.
Marketing requires an insane amount of creativity, but you must also be aware of how to measure the success of your marketing campaigns and efforts.
You need to make sure your methods are actually working, and that needs MATHS.
This article will go over how math can help with marketing, the types of math you will need, and answer a couple of other questions you might have in mind.
How Does Maths Help In Marketing?
As I said, marketing can be a very costly process.
And since the company is spending a lot of money, the marketing department will have to make sure that the money that is being spent on various campaigns is ACTUALLY making money and generating revenue.
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They have to show the progress to the heads of the company or the marketing firm’s clients.
For this process, math is absolutely necessary, since almost all of the mechanisms that are used to track the progress are heavily math related.
Since marketers will often launch various campaigns like discounted offers, promotions, and trying new platforms for marketing, they will have to keep track of ALL of these variables and see if any of them are working with the targeted demographics through mathematical formulas.
These often contain ratios and comparisons such as NPS (Net Promoter Score) – measuring a customer’s likeliness to promote a company, and conversion rates.
Note: Conversion rate is basically the number of customers who bought the product instead of the number of customers who have seen the product campaign.
All of this stuff needs math and any marketer who is not fluent in it will be in a lot of trouble!
What Kind Of Maths Is Used In Marketing?
Here are some of the most important kinds of math marketers need to be familiar with.
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1 Basic Mathematics
Some basic knowledge in mathematics will doubtlessly be helpful – especially general math, algebra, and basic calculus.
If you are thinking about functioning as a marketing analyst in the future, or a career in the marketing research field, you will need the knowledge of simple math to observe and analyze your consumer base.
Once you launch various marketing campaigns, you will need to show the progress of your endeavors to your superiors, or you might need to look at them for yourself in order to figure out what the next step is for the campaign.
Starting from creating the campaign based on PREVIOUS findings, you will need the knowledge of probability to project ratings onto the customer base.
You also need to have an understanding of areas like regression analysis (of estimating the relationships between dependent and non-dependent variables), and the overall ability to visualize the data you have found so far.
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All this is necessary for mapping out the progress (or even lack thereof!) of your marketing campaigns.
We can take an example as “Close Rate” and It’s statistics visualization.
Close rate means the percentage of a total number of leads converted into actual paying customers. Usually, the sales and marketing team measures the close rate to know the difference between the forecasted and actual results.
3 Financial Math
Now, it is no surprise that marketing is one PRICEY endeavor.
And if you are working for a big company, or at a marketing firm, you will need to keep track of the money you have been given for the marketing process and the campaigns – so knowing how to budget is of UTMOST importance.
You do NOT want to tell your employer or client that you have lost track of your finances.
Also, you must know concepts like return on investment, to see how your campaigns have been doing at a point in time, which is crucial in adjusting little parts of the process to finetune your marketing process.
Here is an example of Quota attainment;
Quota attainment measures how close individual sales representatives are to achieving a defined target. This helps in identifying the weak points and plus points of sales representatives. Based on the quota attainment rate, the team manager can easily track and analyze the performance of their sales reps.
Having inconsistent numbers can be a huge deal for a business. This could be due to a lack of proper training, regular feedback, lack of communication, etc.
4 Marketing Analytics
You need to know how to read graphs and charts, and spot patterns.
You will also need math knowledge that is combined with technology, especially subjects like web analytics, social media metrics, and marketing research.
While marketing research can be done relatively easily, web analytics and social media metrics require thinking, tools, and formulas.
So if you do not have the right math knowledge to handle and check these formulas, you might be in a tough spot.
Maths Use Case In Marketing Analytics
Check a few examples that are frequently used in the marketing space.
1. Close Rate Example
The basic formula for calculating the close rate is:
(# of conversions / # of prospects) x 100
To calculate the close rate, divide the total number of conversions by the total prospects, and multiply it by 100.
In this case, the total emails sent are the prospects. On the other hand, the sales you get from your emails are conversions.
Total Email Sent: 500
Conversions or Sales: 50
(# of conversions / # of prospects) x 100: 500/50*100=10%
2. Customer Retention Rate Example
The formula to calculate Customer Retention Rate is:
Customer Retention Rate = [(# of returning customers – # of new customers) / # of total customers within a time period)] x 100
To calculate the CRR, subtract the new customers from the returning customers, then divide it by the total customers within a time period. To get it in percentage, multiply it by 100.
3. Churn Rate Example
The formula to calculate the churn rate is mentioned below:
Churn Rate = (# of customers lost / # of customers within a time period) x 100
To calculate the churn rate, divide the customer lost by the total number of customers you had within a time period. Then, multiply it by 100 to get the figure of 100.
4. Net Promoter Score Example
NPS refers to determining the percentage of customers willing to recommend your products to someone else. Sales representatives usually use this to collect positive and negative feedback from customers. NPS categorizes respondents as promoters, passives, and detractors.
The formula for calculating NPS is:
Net Promoter Score = % of promoters – % of detractors
To calculate the NPS, subtract the percentage of detractors from the percentage of promoters, and you will get the NPS.
5. Quota Attainment Rate Example
The formula to calculate quota attainment is:
(# of total sales/target number) x 100
To get the Quota Attainment, divide the total sales by the target number. To get the figure in percentage, multiply it by 100.
Frequently Asked Questions
Can I Study Marketing Without Maths?
Yes, you can. In most institutes, math is not a prerequisite subject to study marketing BUT there is another side to this.
Most people who have entered the field make the quickly realization of how math-oriented the whole marketing scene is.
If you do not have the right knowledge to manage the marketing processes such as research and analysis, you’ll have a hard time working at a company or firm.
Does Marketing Require Calculus?
Yes, it does – if you’re thinking about being a marketing analyst. This requires calculus, and supporting grad-level math since it is something that has to be specifically studied in an institute.
But you might be able to survive most cases of basic marketing without the knowledge of calculus.
Does Advertising Require Math?
Yes, and no. You will not need a huge knowledge of math, but a basic knowledge of handling graphs, charts, and certain analytics will definitely help in the long run since you get to identify the various trends and such.
You will only need higher math knowledge when it comes to specialized parts of advertising, but in general, you will not need a huge math knowledge.