Want to know if your marketing is working? Here’s how


“To drive sales, we need to get back to old-fashioned basics and set selling as the core objective of our marketing campaigns,” says business consultant Adam Snitzer.

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There’s an age-old marketer’s lament:

“Half the money I spend on advertising is wasted. The trouble is I don’t know which half.”

That sad and expensive sentiment was uttered more than 100 years ago by John Wanamaker, one of the early pioneers of American marketing and the founder of a highly successful chain of department stores that went on to become part of Macy’s.

A century later, many marketing managers face the same frustration. Which is a bit surprising given all the technological advances of the internet era. Digital juggernauts like Google, Facebook, Instagram, YouTube and Twitter have gobbled up more than half of all advertising dollars in the United States by promising precisely trackable marketing performance.

The trouble is that we’re tracking the wrong stuff, so we’re still scratching our heads.

Things like search engine optimization and our ranking in Google search results are nice. The click through rate and cost per click of our online ads and videos is interesting. A growing number of Facebook and Instagram followers and more subscribers to our email newsletters makes us feel good.

But by themselves these metrics simply don’t have enough direct impact on our bottom lines.

To drive sales, we need to get back to old-fashioned basics and set selling as the core objective of our marketing campaigns.

Here’s how digital marketing guru Samuel Junghenn of Sydney, Australia goes about it:

First, start with the right objective: hard cold sales. It’s not enough to get exposure or simply increase awareness.

Second, (you might want to grab a calculator at this point,) Junghenn advises that you figure out how much money you can spend to acquire a customer.

Start by taking your average profit per sale and multiplying it by the average number of times a customer purchases from you. For example, if your average profit per sales is $500 and the average customer purchases 10 times, your average profit per customer is $5,000.

Then, decide how much you’re willing to spend to acquire a customer. Your decision depends on two main factors: Are you trying to maintain your business or grow it? On one end of spectrum, you may want to grow slowly and profitably. In this case, you might spend $250 to acquire a customer in the hope of a 20-times return on investment. But at that price, you won’t attract many new customers, which is OK if you’re just trying to maintain the size of your business.

On the other hand, according to Junghenn, you may want to rapidly grow your business and be willing to outspend your competition by paying $2,500 to acquire a customer.

From here, the numbers flow pretty easily. Say you want to grow your business by $500,000, your average client is worth $5,000 and you are willing to spend $500 to attract a customer. Then you need to acquire 100 customers ($500,000 divided by $5,000) and your marketing budget is $50,000 (100 times $500.)

If it takes five leads to generate a sale, your conversion rate is 20 percent (one divided by five). Multiply what you are willing to pay per new customer ($500) by 20 percent, and you get a target cost per lead of $100.

The objective of your marketing campaign is now clear. Your advertising needs to generate 500 leads at an average cost of $100 each. And you measure success through three ways: cost per lead, conversion rate from lead to sale, and profit per sale, including repeat purchases.

That’s how you’ll know if your marketing is performing. And that’s how you’ll solve old Wanamaker’s conundrum.





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