Abandon All Hope Ye Who Enter Here… is not what marketing should feel like. Unfortunately it’s a common sentiment for businesses due to past experiences.
But marketing doesn’t have to be a creepy forest filled with monsters and blood-sucking beasts. Or feel like a runaway carriage when you do start a campaign. With the right knowledge and mindset you can take the reins and feel in control the entire journey — even if it’s out of your comfort zone.
Have a Map // Establish a Plan of Action
This is the first pitfall for many businesses. Whether it’s because sales are down, a new product/service needs promoting, etc., businesses often dive headfirst without thinking anything through. This is because marketing is treated like a shotgun — point and shoot and hope something hits.
Even when the problem is dire, avoid being reactive. Actually dwell on the problem, this will allow you to be more objective. Then you can create a plan of action, a map if you will, for your next marketing campaign. And a great way to start is by answering these questions:
Where are you at now?
Understanding where you stand currently is essential. If it’s a revenue problem, can you leverage more out of your current customers or are new ones needed?
Where do you want to go?
Having a realistic, and definitive, timeline is essential. How fast do you need your results and is it realistic within that timeframe?
What is it going to take to get there?
Can your business handle it if the campaign is successful? What does it mean for your workload? Can you and your team handle it? Do any processes need refining?
Bring Supplies // Establish a Budget
There are a lot of answers out there all addressing the same problem. How much should I spend on my marketing?
There are a lot of factors that can impact the size of your budget – and, more importantly, what you should do with it:
- The size of your company;
- The age of your business;
- How much the execs give you to work with;
- Who your audience is;
- Where your audience spends their time; and
- The nature of your business.
Laurel Mintz, founder and CEO of Elevate My Brand, wrote an article for Entrepreneur that discusses her company’s recommendations to clients.
Here is how she breaks it down.
- Businesses <1 year old should be working on the business before spending money on marketing.
- Businesses between 1-5 years old should be spending 12-20 % of gross revenue or projected revenue.
- Businesses 5+ years old should be spending 6-12 % of their gross revenue.
While you do not have to follow this formula exactly, it might be a good idea to use it as a guide as you start planning for your marketing budget.
Be Ever Diligent // Tracking the Right Metrics
Tracking the right metrics will give your business a much better understanding of how well your campaign is going and if you are ahead or behind.
But many times the wrong things, or nothing at all, is tracked during campaigns creating results based on feelings and not actual statistics. However, here are some mistakes to avoid when measuring your marketing ROI.
Mistake #1 Not Tracking Conversions
Do you know how many customers you are getting from your website? From Facebook and other social media? From pay-per-click advertising? From any medium? If you don’t, you are not alone. But don’t excuse the [unhealthy] norm as the standard. Climb above the norm and grasp the raised bar.
Start tracking your lead conversion rates by setting up Google Analytics (for your website), creating a spreadsheet, or using sales software. If you are one of our clients already, you’re already set!
Mistake #2 Not knowing how many leads it takes
As much as we’d love to say one lead equals one customer, the reality is that is far from the truth. There is a handy dandy formula that will help you determine this. It starts with an understanding of the 20-25-50 Model.
For however many people your message or offer reaches, anticipate that 20% will show initial interest. Of that 20% who show interest, expect about 25% to actively pursue what you offer. And of the 25% who pursue, look to convert 50% into customers.
For every 125 leads, aim to gain 3 customers. 125 total reach
24 leads to 1st interaction
6 qualified leads to 2nd interaction
Business owners need to come to terms with the staunch reality that it takes about 42 leads to generate 1 customer. This is also important when creating your budget because the more leads may mean more money.
Mistake #3: Not knowing your customer lifetime value
The Customer Lifetime Value is an indicator of how much net profit you will reap from one customer. Keep in mind, the CLV will likely be different for each of your products and services. For a quick estimate, average your top 3 service price points and calculate the CLV with that.
Let’s say your average transaction for your service is $100 per month. On average, you retain customers for 3 years. This means that the CLV for your service is ($100)*(12mth)*(3yr), or $3,600.
You need to know how long your customers use your services to calculate this. You may find it more useful to calculate the Customer Annual Value (CAV) which can be done in similar fashion, but limited to a 12 month time-frame.
So there you have it. When creating your next marketing campaign remember these three important steps for success. And if you find yourself still a little lost, we’re here to help be your guides to success.