When it comes
to profit a large percentage of businesses have a problem with
expenses not income. Hundreds of business owners the coaches meet
in their normal week are wasting thousands of dollars on many
different unnecessary expenses. Advertising is just one of them.
So let's just look at advertising for a moment. Let's look how
that fits in with the grand scale of marketing. The dictionary
definition of marketing is something that quite a few business
owners need to be aware of. I say that because in our travels
as coaches we meet business owners who have an unusual reaction
to our invitation to the free sales and marketing seminars we
present across the country. When personally invited on numerous
occasions the answer is no thanks I don't do any marketing in
my business! As Brad would say to that, 'isn't that interesting!!'.
I'll now give you the Webster dictionary definition of marketing,
'the act of buying and selling in a market'. Which includes everything
from manufacturing to selling to packaging. So every single business
does marketing. Just like every business sells. As Robert Johnsons,
a professional sales trainer says and I quote, 'anyone who can
get in front of another person who can say uh huh to another is
a sales person'.
So let's look at some of the ways to save profit through marketing.
A good place to start is knowing what it costs you to acquire
a customer from every sort of advertising promotion you do. By
that I mean actual paying customers, not inquiries. Most business
owners we meet don't know how to work out if their ads are working
and they just feel that advertising is a necessary expense that
doesn't work.
If you compare the acquisition costs for all types of advertising
that you do you'll find an interesting mix of numbers. For example
you may find it costs you $95 to 'buy a customer' through Yellow
Pages, $54 to buy one from the local newspaper and $25 to buy
one from a letterbox flier. So what do you do now?
Well you could stop running the Yellow Pages ad or at least redo
it with a headline of some sort offering the reader an incentive
to read on. Doing this alone we've seen 19 times increase in response
from an ad! Imagine having that sort of an inquiry increase in
your business. What would that do for you?
The numbers are interesting because if your average customer spends
$500 with you, it means that if you got them from Yellow Pages
you have already spent $95 to get them just in advertising costs
without considering anything else.
If you acquired a customer from a flier it means you have just
made $70 more profit on a sale of $500, a 14% increase. Once you
know your acquisition cost you can try to improve it. You'll find
it varies quite a bit for all the different types of advertising.
It's important to look at other ways to generate leads like strategic
alliances, direct mail, seminars, shows and host beneficiaries
(Yes. This is a marketing strategy that very few people know about
and it just happens to be about the lowest acquisition cost and
most profitable marketing strategy there is and no one knows about
it!!).
The old saying that you shouldn't put all your eggs in one basket
is very true with advertising. Yellow Pages is totally passive
as an advertising promotion. By that I mean, if people happen
to decide on their own that they want a product or a service then
they happen to decide to look in the Yellow Pages then they happen
to decide to look at your ad then they may ring you. There are
so many opportunities for them to find someone else before they
see your number that the percentage of sales that you can win
from Yellow Pages before they get to another business before yours
is very high.
A better way or another way of thinking is to take your business
to your customer by asking yourself where can you find them. Then
what will you use to communicate to them to get them interested
in using your business. A direct mail letter is an obvious choice
if you define your target market accurately. Or what about a host
beneficiary marketing strategy where you find other businesses
that have a complimentary (but not competing) customer database
that you can distribute to. This idea will work for nearly every
business type there is!
Can you see how these marketing strategies can have a better result
than the Yellow Pages? It's because you are taking your business
to them. Educating a prospect as to why they choose to buy from
you now.
It's important to know all these things and the best judge is
acquisition cost. Work it out for your business. While your doing
that you'll need to know what your conversion rate from initial
inquiry to actual sale is. You may find that very interesting
too when you compare that with different forms of lead generation.
But that's another story for another day.
Work on testing and measuring and you'll find thousands of dollars
in extra profit even without our help!
