You spent $1,000 on an ad and you got five new customers. That’s great! Or is it?
How much did each of the five customers spend with you? Will they become return customers? Did these customers take up more time or resources than your regular customers? Are you even sure the ad is what brought them in? How much time did you spend creating the ad? Were there other fees on the ad? Can you write off the cost of the ad come tax time?
Even if you made double the cost of the ad in sales - was it really worth it?
We’re talking about how to make sure your money goes further, and how to drive up that return on investment; because we don’t want you throwing your marketing budget into the wind.
If you’re running a business you probably know you calculate your return investment by looking at what you put in versus what you get out; basically the costs versus benefit. The big question is how to make the benefit bigger than the costs. Follow these steps to make sure the benefits of your marketing keep growing, while the cost of your marketing gets smaller.
Step 1: Define It
What’s your current return on investment for your marketing efforts? If you haven’t yet, it’s time to dig into the numbers. Don’t forget to include the soft costs too - this includes your time and the value of those minutes and hours. The cost of a social media ad may be low, but if you’ve got staff writing the post, or a designer making the graphic, you have to factor in those costs as well. How much you’re investing in the ad isn’t the end of the story.
Step 2: Run Some Tests
Experimenting with your marketing investment sounds counterintuitive, since you’ll be spending more in the short term, but by testing your approaches and really digging deeper into those numbers, you’ll find out which investment has brought you the best results. Test out different marketing tactics; if you’ve been spending on social media ads, try your hand at Google Display Ads. If you’ve been focusing on email marketing, give networking a go. Trying out different tactics will help you reach different audiences, but also get more valuable information for your analytics.
Pro Tip: In your testing phase, ask for more. Specifically, if you’re dealing with an ad rep for a radio or TV station or any print publications too. For example, if you’ve been investing in print ads, tell your rep you’d like to test or at least hear about incentives they can offer for their online edition for your current investment. Oftentimes reps will at least give you an introductory rate, or add onto your package to help reach other audiences. If nothing else, you’ll have more information.
Step 3: Set Your Goals
Now that you know which tactics have been effective for your marketing, set a reasonable goal. Whether that’s a 3% increase in return customers, a refocus on a particular advertising medium, or a reduction in costs, this goal should be planned and communicated to your team. Remember a reduction in costs can result in a reduction in quality for many things, including graphic design, packaging, and other marketing tactics; so consider whether a reduction in quality will impact your bottom line too.
With your goal in mind, consider all the tactics to approach it. It may mean changing keywords for online ads, reducing the frequency of radio ads and mentions, or it could be investing more per ad to reach a super target-rich environment.
Step 4: Refine your Process
Once you’ve created a successful process - from planning to creating tactics to reviewing your results - start to refine it. You’ll naturally get faster as you practice, but putting the successful process on paper, and following through on those steps over and over (until something changes), will help drive the value of your dollars.
Step 5: Delegate and Step Back
Once your process is successful, you’re likely making more money and in a position to start growing another part of your business. This could be adding a new product or service, reaching a wider geographical area, or simply spending more time on admin, human resources, or management of your business. At this point, you should consider offloading your successful marketing policies and process to someone on your team (Or a highly-qualified agency wink).
Not only will delegation free you up, you will also reap benefits from having a second set of eyes on your process; which can often result in even more efficiencies and streamlining.
Step 6: Start Over
An inevitable part of business is change. Whether it’s technology, equipment, human resources, regulations, or even personal experiences having an impact on your business; change is going to impact your return on investment, which is why you’ve got to constantly reevaluate when you’re starting to see your results changing – for the better or worse. Even if you see your market share growing exponentially, you should dig back into those numbers to find out why and how to keep it going!
Happy to Help
We’ve been creating marketing plans, strategies, and demonstrating return on investment within our agency for more than eight years now - not just for our client - but for our own team’s growth too! If you want to chat with a small business with big goals about how you can make the most of those marketing dollars, get in touch. We’re always happy to help!
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