Marketing can and should be one of the biggest expenses in the month of your business per month (if not, then we have to talk about what you invest in growing your business. ..). However, for many business return they get for that monthly spending is “variable” at best, most likely “unknown” in practice.
The secret of being an agent of truly effective and profitable marketing ultimately is to be clear return on investment (ROI) that you receive from your marketing investment. As a responsible business owner your focus should always be on getting the maximum benefits of the money you spend and, despite all the hype and voodoo superstition that goes around, marketing n ‘is no different from any other part of your business .
In the simplest form, marketing comes down to the art of “buying profitable customers” - for every pound you spend on marketing you should get more than a pound returned to profit. If not, your marketing plan is broken (or more likely missing …) and we have to solve this problem as soon as possible.
We talk elsewhere to understand the true value of a customer of your business, and how we can improve this value, but we focus here on one of the easiest things you can do to dramatically improve their marketing performance. Looks dramatic is not it? But in reality, it is very small 3 easy steps:
1 measure of how your marketing is performing
2 know what marketing strategies or ideas are unprofitable and stop
3 know what marketing strategies or ideas produce profitable results and make more of them
There, you said it was easy …
Stop wasting your money
Going back to the mechanics of how to do step 1, but in my experience step 2 that most business owners seem to have problems with.
There seems to be an unwritten rule that every business has to be in the Yellow Pages rule requires an expensive place, or be distributed weekly newspaper ads. And I guess there’s no shortage of people useful business call your business “exciting opportunities for you to earn more business” by spending money to advertise with them / buy their promotional items / payment for services marketing cold etc, etc, etc …
In practice, one of the fastest things you can do to make your business more profitable is to stop wasting money on MARKETING DOES NOT WORK! Enough, take the money you would have spent and invest in other strategies that return a profit.
It will feel like a big step for some of some of their marketing, but you can do it. Remember that you can turn it back on later if you want, but in reality, if something does not work you must stop.
So what is profitable?
Now back to step 1, how do we measure real marketing strategies that are profitable?
Well there are two parts to this and we will see how we measure each then out the important test.
What do you spend? The first part is a real sense of quantifying it currently spends on the market. This is how we do it:
1 Make a list of all the things you are currently doing to attract new business today, write them down and keep the list handy as I can almost guarantee that not just put down the first time. Here are some memory requests to help:
a. The usual suspects: newspaper ads, yellow pages, brochures, flyers, networking events, pay per click campaigns, etc
b. The car with chauffeur, less obvious brand workwear, website, display on your desk, promotional gifts, etc.
c. The often forgotten: gifts and thank you cards to customers, their regular newsletter.
2 Once you have a good first step in the move list and put a dollar amount against each of what really happened in this in the last 6-12 months. The best way to do it properly and thoroughly go through all your old bills and to dig the actual amounts. I often meet people who underestimate or forget certain additional payments. And as you go through the bills you may well find other pieces of marketing expenses that you forgot in your original list to add them in and move on.
3 Once you have a total expenditure for each strategy to break this to an average monthly expenditure of each. Any of these lines looking frighteningly large compared to what he thought wrong?
So the next step is figuring out what all that translates into additional business movement. For this we take the list of strategies that we have the product and make it a checklist or scorecard. From now we give each new bit of business we come to one of the strategies of the list, based on what you ask the customer to pick up the phone, walk through the door, or email one to contact you
For every order you receive, what you‘re selling, we want to be able to allocate the proceeds to one of the strategies on your list, maintaining control and add them at the end of each month.
If you are able to go back in historical controls and is divided into the marketing strategy and then that’s great and gives us more data to work with, but if you can not do it without problem, starting today, to keep records now onwards as part of their daily activities, and at the end of each month and add the totals used to examine marketing as described below.
Is it useful?
Now the last step, the critical point where we realize if you have been investing wisely in your marketing or waste money on things that do not work, either out of habit or lack of confidence to stop them.
So we have a list of strategies and have a cost for everyone. We know what we spend.
We also have the other side of the balance of income provided by each strategy. Now revenue is income and what we are really interested in the answer if we have to work on the actual gross margin throughout this strategy income strategy. How are you able to do this will depend on how advanced are the financial controls in your business today:
- If you can break down that gross profit precisely by line / product service, then great, go ahead and do it.
- If you have not been in this kind of break, but you’ve done enough work on the growth program that you know that the average of the company’s overall gross margin and then used to calculate a gross profit for each strategy.
- If you are not far away and do not have numbers on their typical gross margin and take a guess - if a customer spends £ 100 to you much of that do you expect to keep on average? I guess if you have to do, but as good a guess as possible and use it.
Now the crisis, for each strategy, you should be able to see what you spend and what its implementation, so let your red pen and highlight the good, the bad and if you do not have them arrested, the ugly:
- A strategy in which to spend more of their gross margin setting is not profitable and should be a serious candidate to stop ASAP. Are you buying parts of a book of over £ 1 stop, keep the money for yourself or invest more wisely in better strategies.
- A strategy in which spends less than the gross profit generated is profitable and you should try to do more. Are you buying parts of a book for less than £ 1 Once you know how much I should buy? How can we increase the volume and do more of that?
And that’s it. It’s not that complicated really. Just discipline yourself to get the actual figures in black and white and review periodically.
Keep up the measure and its marketing can not help but be more profitable.
Kev Roberts has helped small business owners [http://vertbusiness.com] grow your business for years and understands the need for simple to attract the most profitable customers on a limited budget tips.