Small Business Blog

WARNING: Don’t freak out at all the math to follow, it is very basic… and if you’re in business, YOU need to understand this!!! Great marketers understand marketing is an investment. If you invest the $10,000, what return are you getting? Start from the top bullet point and follow the points logically through to the conclusion.

Lowering Client Acquisition Cost Recording & Reporting Data

Marketing cost: EG $10,000
How many leads/enquiries from the advert: EG 240
How many clients/sales from the advert: EG 120
Conversion rate from lead to client/sale from the advert: EG 50% (Calculated; 120 / 240)
Total value of sales from the advert: EG $60,000
Average sale value from the advert: EG $500 (Calculated; $60,000 / 120)
Lead Acquisition Cost from the advert: EG $41.67 (Calculated; $10,000 / 240)
Client Acquisition Cost from the advert: EG $83.33 (Calculated; $10,000 / 120)

Total Marketing cost in business: EG $75,000
Total number of leads/enquiries in business: EG 2500
Total number of clients/sales in business: EG 1500
Conversion rate from lead to client/sale from the advert: EG 60% (Calculated; 1500 / 2500)
Total value of sales in business: EG $1,050,000 • Average sale value in business: EG $700 (Calculated; $1,050,000 / 1500)
Lead Acquisition Cost from the advert: EG $30 (Calculated; $1,050,000 / 2500)
Client Acquisition Cost from the advert: EG $50 (Calculated; $1,050,000 / 1500)

Total value of Gross Profit in business: EG $472,500
Total Gross Profit percentage in business: EG 45% (Calculated; $472,500 / $1,050,000)
Average Gross Profit percentage per sale in business: EG 45%
Average Gross Profit per sale in business: EG $315 (Calculated; $700 x 45%)

Total value of Gross Profit from the advert: EG $24,000
Total Gross Profit percentage from the advert: EG 40% (Calculated; $24,000 / $60,000)
Average Gross Profit percentage per sale from advert: EG 40%
Average Gross Profit per sale from the advert: EG $200 (Calculated; $500 x 40%)
Net Profit per sale from the advert: EG $116.67 (Calculated; $200 - $83.33)
Total Net Profit from the advert: EG $14,000 (Calculated; $116.67 x 120, or by $24,000 - $10,000)

Percentage of total leads/enquiries from the advert: EG 9.6% (Calculated; 240 / 2500)
Percentage of total clients/sales from the advert: EG 8% (Calculated; 120 / 1500)
Percentage of total value of sales from the advert: EG 5.7% (Calculated; $60,000 / $1,050,000)
Percentage of total gross profit from the advert: EG 5.1% (Calculated; $24,000 / $472,500)

Advert ROI (Return on Investment): EG $14,000 (Calculated; $24,000 - $10,000)
Advert ROI% (Return on Investment Percentage): EG 140% (Calculated; $14,000 / $10,000)

Conclusions:

If you want to drive down the costs of your marketing and get better results at the same time, then you need this level of detail in your small business. It is not as hard as you might think. As you can see most of this data is calculated, so all you really need to do is ensure you and your team Record the basic information so that you can report on it periodically. Once you setup an excel spreadsheet to do the calculation for you (or have marketing software that just does it), all you need to do is record data. There are number of different ways to do this;

Our goal of course is to lower acquisition cost, so long as money you invest in marketing brings in more than the original investment, you can work towards an unlimited marketing budget. (NOTE: if your business’s other expenses are massive and you can’t get clients to keep purchasing year after year then the unlimited marketing budget will never happen).

What do you do with the information?

Stop unprofitable marketing tactics or campaigns all together and invest the money in ones that actually make you money, or just add all that cost directly to your bottom line!!
Marketing Experiments to find the best performing (creative/copy changes, offer changes, target changes, A/B split testing)

Action Points

Make it happen! Can you really afford not to know this information? Armed with the right info you can make great decisions which can have a huge effect on your marketing & business results!

Check your recording & reporting systems
Train team on recording
Schedule monthly reporting

Increase Repeat Business

James Cooper — Wed, 30 Mar 2011 14:15:00 GMT

Increasing repeat business is, for the most part, the first place most small business owners should begin actual marketing campaigns if they are looking for a simple, quick and low budget way to generate increased revenue & profit.

To get an increase in repeat business, which is the second of our four, small business marketing goals, you first need to understand a very simple point;

Articles in this series:

Getting existing customers to buy again is much easier, faster & cheaper than trying to get a new customer.

Now, over the years I’ve heard a range of statements & statistics claiming how much more expensive it is to get a new customer than to get an old customer to come back. Claims range from about 4 times all the way to 10 times. Heck, I even wrote an article years ago (Repeat Busness Tactics - 8 Top Techniques) claiming it was 6 times. These days I’m more likely to ask for the proof of such a stat.

I don’t know if it’s 6 times more expensive, I haven’t seen any studies (although it is claimed by many “marketing gurus”), I don’t have any of my own recording & report on the matter, but this doesn’t mean I still don’t fully subscribe to the idea that;

Starting your marketing campaigns by first focusing on increasing repeat business from your past and existing customers is the smartest thing to do.

Permission Marketing & Increasing Repeat Business

I like to take this goal (increase repeat business) a little wider than just increasing repeat business from past & existing customers and file it under Permission Marketing. Permission marketing is simply saying you have got someone’s contact details and their permission to communicate with them (directly written or inferred through existing relationship). Overtime you find some people purchase your services/products immediately and others that might take a year, but the point is they purchase from you and not the competition. Thats because you have been communicating with them for a period of time (where most businesses won’t bother communicating).

So who is the “someone” you have contact details for?

Leads/Enquiries
Existing Opportunities
Past Failed Opportunities
Past Customers
Existing Customers

Basically, your database.

What is the individual marketing sub-goal for each group of your database?

Leads (Goal – Lead Nurturing. Get them to purchase, (or) Get them to become a Sales Opportunity)
Existing Opportunities (Goal - Opportunity Nurturing. Get them to purchase)
Past Failed Opportunities (Goal – Opportunity Resurrection. Get them to become a Sales Opportunity once again)
Past Customers (Goal – Customer Resurrection. Get them to purchase from you again)
Existing Customers (Goal 1 – Customer Retention. Keep them purchasing from you. Goal 2 – Number of Transactions. Get them to purchase more frequently from you. Goal3 – Average Sale Value. Get them to purchase higher value items. Goal 4 – Referral Value. Get them to become raving fans.)

Tactics To Increase Repeat Business Include:

eMail Marketing 1 - Newsletters
eMail Marketing 2 - Value Offer Campaigns
eMail Marketing 3 - Sales Offer Campaigns
Direct Mail 1 - Print Newsletters • Direct Mail 2 - Value Offer Campaigns
Direct Mail 3 - Sales Offer Campaigns
Telephone Marketing - Value Offer Campaigns
Telephone Marketing - Sales Offer Campaigns

NOTE: email marketing is very quick to setup and very low cost, and thus is an attractive first step for many small businesses however, it can have a poor response rate compared with communication that is a little more tangible.

Action Points

Determine the marketing sub goal you need to focus on first to increase repeat business. Do this by reviewing your database under the eyes of the 5 groups listed above.
Determine your Offer/s.
Select a tactic/s for your first group/s.
Implement.

Set Solid Marketing Foundations for Your Small Business

James Cooper — Tue, 29 Mar 2011 15:15:00 GMT

If you are looking to (re)set solid foundations for your small business within your Marketing “department” (this might just be you with a different hat on), then you’ll need to understand what to do and where to start. Let’s do it!

Marketing Foundations

Your Market
Your Message
Your Offer/s
Your System
Your Results

Marketing Foundations – 1. Your Market

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Basically, you need to understand your market by doing a market analysis. Now, in small business… it is unlikely that the first time you do this that it will be perfect. After all, you could spend 100 hours analyzing data and information… only to have your work not achieve anything through inactivity around promotion. That would be a massive waste of time and effort! Having said that, if you invest a few hours and start with a basic market analysis then, this is enough to set your focus for implementing marketing campaigns with a much higher chance of success. You can then periodically revisit your 'market analysis' and refresh to a high quality.

So what is involved?

Market Analysis
- Segmenting
- Targeting
- Marketing Personas

Marketing Foundations – 2. Your Message

What you communicate is important. Whether it is written or verbal communication, your message must be clear & consistent. Help your team & your customers to really “get” your business. Set yourself apart from everyone else, tell people how you are different. What makes you unique, why should I care, why should I buy from you? Carve out a niche.

So what is involved?

Marketing Foundations – 3. Your Offer/s

What are you going to offer your target market that they just have to take up? Consider that “offers” are not just “sales offers” (eg buy 2 get 1 free), offers include getting people to respond to your marketing in the first place with an enquiry, also know as Lead Generation Offers. Offers can also take the form of ‘Value Offers’, they are designed to build goodwill with your database (both uncoverted leads & existing/past customers). All your offers need to be compelling & powerful. Get this right & you will fill your marketing & sales funnel. Weak offers are worthless.

So what is involved?

Offers
- Lead Generation Offers
- Value Offers
- Sales Offers

Marketing Foundations – 4. Your System

Making sense of marketing has always been a little difficult for small business owners. Why? Well, it seems marketing tactics are often ad-hoc at best; “So many ideas & terms, what are they all doing? I don’t know what works? We do lots of little things, but there is no real master plan behind it.” All common lines we hear from small business owners. But if you can understand that all these different strategies, tactics fit into a clear system or Map you’ll be a mile ahead of the pack! Create a visual Map for you and your team, and watch the light bulbs go on!

So what is involved?

mimosaPLANET’s Integrated Marketing & Sales System (we'll insert a link to an example Map within the next 2 weeks - bookmark the page and make a diary note to check back soon)

Marketing Foundations – 5. Your Results

All great marketers know that you need some kind of way to measure your results. You’ll need what we call a Recording & Reporting System. What is the marketing source of all your Leads/Enquiries? What about the marketing source of all your New Clients? This is basic information that can help you transform your marketing from expense to investment. Know your marketing ROI.

So what is involved?

Recording & Reporting System

Action Points

Segment your market this week
Select your target market next week
Build your marketing personas the week following
Move on to Your Message, and so on.

Do one thing a week and you’ll be working towards better results! Go for it!

Small Business Marketing Goals

James Cooper — Mon, 28 Mar 2011 17:08:00 GMT

Do you know what the main goals of your marketing should be? Understanding our 4 small business marketing goals will help you organize your marketing efforts, and improve your results by focusing your marketing initiatives into clearly defined areas.

The 4 Small Business Marketing Goals

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