If you’ve been in business for several years, you may be at a stage where you’re not sure how effective your marketing is anymore.
Perhaps you’ve been:
- Advertising in the same publication month after month, wondering if anyone sees it?
- Attending networking functions but not sure if it’s worth your time?
- Investing in digital advertising, but not sure if your expenditure is getting results?
When you want to increase the number of enquiries you are getting, it can be hard to know what new marketing strategies to try, and how much to spend on each.
Covid lockdowns looming or current can also add to the uncertainty, making some strategies impossible (such as face to face meetings) and others less effective.
Here’s a simple way to work out the cost of different marketing strategies, so you can make sound decisions about how much to spend on marketing your business.
1. List your current marketing activities and their effectiveness
Your marketing activities to date may still be highly effective; they may have stalled; or they might be costing you money. You won’t know until you have a system to measure activities and results.
The simplest way to start is to list all the marketing strategies you are currently using. Your digital strategies may include:
- website SEO
- paid Google advertising
- organic Facebook posts
- paid Facebook advertising
- LinkedIn articles
- referrals from online industry groups, etc.
Non-digital (“old school”) strategies might include:
- networking groups
- client referrals
- strategic partnership referrals
- office or car signage
- letterbox drops, etc.
Once you have your list, the next step is to ask each new enquiry how they found out about your business. For smaller businesses this may be via a simple tally at reception as enquiries come in, and for larger businesses data could be entered into the CRM.
By the end of a month you’ll have a clearer picture on how many leads each strategy is generating for your business. By the end of 12 months, you’ll have more valuable data such as what strategies are seasonal, or are becoming less effective over time.
2. Record the cost of each marketing activity, lead and customer
Now it’s time to record the cost of each marketing activity. For a networking group, it might be the annual fee divided by the number of meetings, plus the meal cost (which might equal $80 per event).
For your e-newsletter it might be the cost of your software plus the hours taken by a team member to write and send the content (say, $180 per e-newsletter).
Once you have the cost of each activity per month, divide that by the number of enquiries that strategy brought in, the number that became customers, and the conversion rate. You can then get a clear picture on the cost per lead and per customer.
Here’s an example:
Now you know what each strategy is costing you, you can make some decisions. For example, you might decide that your Google Ads aren’t bringing in qualified leads, and you are wasting time answering questions for people who are just ‘tyre kicking’. You might decide to make your ads more specific and targeted to your ideal client, or to set up a questionnaire they fill out before you respond to them in person. This will reduce the number of unqualified leads, and boost the conversion rate.
Conversely you might discover that although the number of leads generated is not high, for a specific strategy the conversion rate is. For example, referrals from existing clients may cost you nothing, but due to the trust involved between all parties, they result in conversion 100% of the time. This low-effort-and-cost but high-reward strategy is worth spending more time on!
Once you’ve got into the habit of reporting, you can get more sophisticated with your analysis. You can start measuring the lifetime value of customers by how often they buy from you, and how many people they refer. You could also break your measurements into product or service groups.
3. Add some new marketing strategies to the mix
With your new reporting, you can quickly work out the cost effectiveness of any new strategies you employ.
If you choose to run a paid advertisement, for example, you can add an offer code for a limited time deal, to generate urgency and easily define the lead source.
When trialling a new strategy that involves a large investment of time or money, ensure you find a balance between giving it sufficient time to get traction, and knowing when to tweak the format or decide it’s not working.
Beware of long-term contracts so you don’t get locked into a strategy that may not turn out to be effective – for example an annual up-front payment for SEO, or a 12-month radio campaign if you haven’t tried it before.
Before you increase your marketing spend…
There are many other aspects of your business to consider before employing a new marketing strategy, including:
- Are my service/production team already working at capacity? (if so, it’s important to allow for increased resources and factor this additional cost into your calculations)
- Is there sufficient profit in my business to make an increase in turnover worthwhile?
- Are my customers happy, or will an increase in marketing simply result in more dissatisfied customers and bad reviews?
- Are we promoting our most profitable goods and services to maximise our investment?
How Yellow Coaching can help
At Yellow Coaching we work with your business holistically, to ensure that every part of your business is working at its peak.
We don’t believe in quick fixes, but in developing businesses and teams into solid, high-performing vehicles to create wealth and time for the owners, and happiness for team members.
We do a thorough analysis of your business before we begin, to ensure we are working on what will get you the best and quickest results.
If there’s more you want from your business in any area – more time for you as the owner, a happier and more productive team, or increased profitability – we can help.
To book a complimentary chat about your business, simply get in touch. We look forward to hearing from you.