If you are like many small business people, growing your customer base and profitability are among your top goals. But how do you do it? How do you use the new tools that generate real results? Many small businesses use the costly method of trial and error instead of taking a step back to develop a plan. How could that be? It’s hard to know the right questions to ask when the tools for marketing and advertising are changing every day. This means precious resources end up being spent on tactics that can’t work because they are not in alignment with all the other efforts and activities to maximize every dollar spent. This leads to a “false negative” resulting in a general distrust of “all things marketing”. This is a problem, because marketing is one of the core pillars on which every successful business is built. Do you have a website? Why? You need a way to communicate your products. That’s marketing. Do you have a brochure? Why? You need a way to communicate your benefits. That’s marketing. “But, we get our business through referrals.” Even firms that say they rely on referrals and walk in traffic are actually engaged in “word of mouth” marketing. Which is different from advertising. NOTE: Advertising and marketing are not the same thing. Advertising is the placement of ads in either a print, digital and television or radio medium primarily. It can also include signage or even your building (location, location, location). Advertising gives you’re the ability to create “Reach and Impact”. Marketing are the words and imagery that humanize and communicate the value proposition. The truth about marketing is it is the process of acquiring a customer. And ALL REVENUE begins with marketing. It includes decisions on pricing, locations, offers, promotions, advertising, public relations, tradeshows, events, and a whole lot more that we are about to show you.
The first and most important thing you need to know about marketing is how much does it cost you to get a customer? Most business people can not answer this question. But without knowing the answer to the question, you are left guessing about how much you spend, what marketing will be effective, and what tactics will drive a Return on Investment (ROI) for you. Many B2B businesses will spend $200 to $2000 or more to acquire a lead depending on the Life Time Value of that customer. Knowing the difference is critical. It will help you lay out a realistic budget for your marketing efforts, based on the hidden costs you already spend. Here are a few tips on how to calculate what you spend to acquire a lead. Whether your number is $40 per customer or $10,000, now you know what will make sense from a marketing perspective. You will also know what it costs to add sales people as a marketing expense (tough way to get leads) versus investing in a marketing and advertising campaign. Here we’ve provide here some comparative costs of tactics small business use across some popular advertising channels.
1st: Add up all the leads you receive in a month. This needs to be an average month. It is better to get all the leads of a year but we can estimate using an average month and multiplying by 12.
2nd: Add up every cost and activity you used last year to get customers. Did you use an event? Did you go to a tradeshow? Do you have sales people’s salaries? Did you do any advertising? Did you get your name in the paper? Did you build a website? Did you use Pay Per Click on Google? Be honest, you need to figure out every effort you made and the cost associated with it for the year, then divide by 12.
3rd: Divide your cost per month by your leads per month. This will give you an average number of your cost per lead. You will be surprised at the number at the end.
Whether your number is $40 per customer or $10,000, now you know what will make sense from a marketing perspective. You will also know what it costs to add sales people as a marketing expense (tough way to get leads) versus investing in a marketing and advertising campaign. Here we’ve provide some comparative costs of tactics small business use across some popular advertising channels. https://www.designbynewton.com/smallbusiness/
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