Here's a real-life example of why coming up with a realistic marketing budget is so important to your company's very existence.
In 2013 my client was getting customers mainly by face to face interaction - networking. They decided to experiment with Google Adwords Pay Per Click (PPC) advertising to try to expand their reach beyond networking. They actually hire someone, instead of doing it themselves (Thank God!).
I mean, how many events do you have to attend to try to find ONE person who is in the market for the niche item you're selling? Of course, they were posting losses every year!
My client felt they were being very smart and prudent. They were going to spend $350 per month on PPC. They actually found a professional to do their PPC campaigns. (Thank God they didn't try to do this themselves!)
Sounds fair, right?
I met them at the end of 2013. I analyzed their 2013 activities and showed them, right there in black and white, that the $3,150 they spent in 2013 brought them 400 website visitors of which 12 people filled out their website contact form. I don't believe any of those 12 became a customer (in which case they threw $3,150 out the window.)
However, let's say they "converted" 12 people. This means that 12 people were convinced to fill out the contact form, so these 12 are leads for the sales team.
$3,150 spent divided by 12 leads equals $262.50 cost per lead/acquisition.
$262.50 is the CPA/cost per acquisition of 1 Lead (NOT A SALE), just someone who says they want more information. They spent $262.50 for each of the 12 people who made contact, asking for more information over a 9 month period.
So, I did a competitor analysis and I showed them that their direct competitors were spending $3,000+ per month on PPC and other activities that ranked them on page 1 of Google (SEO, search engine optimization).
Why were the competitors spending so much? Because the average revenue that they got per 1 new customer is over $6,000!
Who wouldn't want to spend $1 to get $2? (I've said this before and I'll keep saying it again.)
So, the client is convinced and comes onboard with me in June 2014.
I just did an end-of-year report for them.
In the 8 months I've been handling their account, they've gotten over 2,000 local website visitors, and over 6,000 unique visitors in all.
They've also received 170 phone calls from online activities (I do call-tracking), plus 18 people who filled out the contact form on the site. That's 188 leads generated.
For the first time ever in their history, they closed 2014 with a profit!
So, they had 188 leads and they spent $6,800 in total - because we didn't do any PPC/pay per click.
$6,800 total spend divided by 188 leads equals $36.17!
That means they spent $36.17 to get each 1 of the 188 leads!
I helped them restructure their sales team and strategies, so they have a crack sales team now. Those guys close a lot of leads.
Even if only 1/3 of those 188 people became a customer, that's 62 new customers. At an average revenue of $6,000 per new customer, that's $372,000!
Was it worth spending $6,800 to get $372,000 in new business?
YOU DO THE MATH!
Maggie Curran is a seasoned business development & strategic marketing professional with international experience. She's lectured on marketing at the University of Miami and Florida International University, among many other private workshops and classes online and in person. She's known for being instrumental in making retired baseball great Sammy Sosa, the "Social Media King" in 2013/14.
MaggieCurran.com
No comments:
Post a Comment