Focus on the Numbers
We spent the past week locked in a hotel room with two well-known and very successful business owners. They came to Orlando and booked us for the week to help them piece together a marketing plan for an upcoming seminar series they are promoting.
Rest assured this was not an inexpensive proposition for them.
But it was fun. And we learned a lot. And they learned a lot. And a lot was accomplished. In fact, in the end, they were extremely impressed and felt it was time (and money) well spent.
What’s The Coup De Grâce?
The curious thing was what they were most impressed with. We figured they would find value in our creative ideas or our copywriting ability or our zeal for cranking out promotional concepts. Perhaps they would relish watching us design a web site (in minutes) or roll-out a full page print ad or design a logo or any other technical aspects of marketing.
Yes, they found value in those things—but none of these things served as the coup de grâce.
And that’s interesting…
Many people get all tangled up in the technical aspects of marketing. They worry about how something will look or using exactly the right words or making exactly the right offer—and hey, these are all very important.
But did you know you could have the most brilliantly written advertisement executed in the perfect manner and still have it fall flat on its face? Oh yes…
More important than any of the technical aspects of marketing are the logical, practical, economically sensible numbers of the whole thing…numbers relating to dollars and cents and numbers relating to leads, conversions, and new customers.
And that’s where the “wow” factor kicked in for these gentlemen who gave up their week (and a piece of their company) to work with us.
The Secret Of The Numbers
What we’re talking about is the simple economics of the promotion. These must be in place well before ads or logos are designed. And for many business owners, the whole process of “marketing economics” is a tremendous mystery.
We realized that we frequently take for granted our ability to “crunch the marketing numbers” and may not give this topic as much attention as it deserves. So we decided to attempt to walk you through the process of how we do it.
Let’s get started, shall we?
Before we get to the cash factor, let’s discuss the system factor. All good marketing promotions begin with the acquisition of interest—otherwise known as a lead.
Leads come from many places. And your business’ lead sources will likely be different than ours. But let’s go through a laundry list of potential wells from which you can draw leads:
Trade pub ads
Pay per click
You get the idea…
The important thing is to make a list of all relevant lead sources for your business—then devise a system to acquire and handle those leads.
How To Create A Marketing Funnel
Let us strongly suggest that you use the same basic offer for all lead sources. This will significantly reduce the amount of stress involved with handling those leads. You want to streamline your process, especially in the beginning.
Once a lead is acquired, what do you do with it? Some popular options:
Mail a package
Live seminar or workshop
Tour of your facility
Once again, we strongly suggest that you treat all leads the same unless you have a very good reason for doing otherwise. This will make it a lot easier for you to keep up.
So here’s what happens…
You generate leads by making an offer (e.g. free report, free consultation, free scoop, half-off, tires for life, free e-book) in many different places.
All leads get dumped into a follow-up funnel. This funnel usually contains a multi-step process. For instance:
Immediately: send free report with sales letter
Day 3: follow up phone call
Day 5: follow up email
Day 7: mail sales letter #2
Day 11: follow up email
Day 14: mail sales letter #3
Day 17: post card
Day 21: final notice letter
Of course, if you generate a handful of leads every day, keeping up with this could get pretty hairy. Each day you’ll need to send emails, make phone calls, and mail packages to a different group of people.
Can you imagine what your business would be like if you walked into your office every morning with a laundry list of people who were waiting for the next step in your marketing process? You’d be generating more business than you know what to do with but guess what—BIG POINT HERE—this is where most people break down. They can’t (don’t, won’t) do it.
Trust us, pleeeeaaase trust us…consistently following up will CRUSH your competitors because they don’t do it.
Interested in a pretty easy way to keep up with all this? Get ACT! Already have it? Great.
Read the help menu about “Activity Series.” This under-used function will allow you to preprogram steps in a follow up process. Then each day, ACT! will generate a list of reminders. All you have to do is go through the motions.
Have a better idea? Share it with us. We know of one, but it’s very expensive: Infusion CRM.
To us, designing this whole process of lead acquisition and follow-up is second nature and takes about 10 minutes. But we can remember when it seemed like foreign territory. Do yourself a big favor and do this exercise.
How To Beat The Best Stock Market Returns
Now comes the fun part—the NUMBERS!
On a sheet of paper or a white board, write out all of your lead sources. Associate a cost and a target number of leads from each source. This is always a guess. The important point is to measure the actual number of leads you receive from each source and update this sheet on an ongoing basis.
Here are some benchmarks of cost and response to help you get started:
Direct mail (letters): $85/100, .5% - 1% response
Direct mail (post cards): $40/100, .1% -.5% response
Print: (call and ask for the rates), .1% -.2% of circulation response
Pay per click: $1 - $2 per click, 10%-20% conversion to lead
This will help you determine the number of leads you could acquire from each source and how much that would cost you.
Now you must estimate a conversion ratio from lead to prospect. We recommend using your existing closing ratio. If you don’t have one, try using 10%.
So let’s say that you can get 200 leads per month for $6,000. That’s a cost of $30 per lead. Some lead sources will be lower and some higher. But that’s OK. You need all of them.
The cost of your entire follow up system per lead is $10.
You expect to close 10% of your leads. Your average sale is $1500 and your cost of goods sold is $200 so you net $1300.
The numbers will look like this:
Lead acquisition: $6,000
Follow up: $2,000
Total marketing cost: $8,000
New customers: 20
Gross revenue: $30,000
Net of cost: $26,000
Net of marketing expense: $18,000
This is all very basic and rudimentary and you can laugh at our accounting skills if you want. But this basic equation is what’s required BEFORE you begin marketing.
In this scenario, an upfront investment of $6,000 in advertising yields $18,000 net in your pocket. In one month. Add in the follow-up expense and you’re at $8,000. But you’re tripling your investment in one month! Try to get that from the stock market.
The critical message embedded in this lesson is this: you cannot view marketing as an EXPENSE. If the numbers work in your favor, marketing is an INVESTMENT—and a darned good one at that.
(Of course, if your numbers don’t work out like this…if your marketing cost outweighs your income…you may need to reevaluate your business. And no matter how great your design or copy or clever offer is, nothing will change bad numbers. That’s an entirely different discussion.)
But so many people hem and haw about the cost of advertising. But understand, if you don’t spend money on lead generation, you will get NO LEADS!! And if you get no leads, you will make NO MONEY!!
It’s all so very simple.