If you haven’t read the first two blogs in this series: The 10 Most Important Rules of Smart Marketing in the New Economy and How You are Losing Out by Not Following These Marketing Rules, you may want to catch up to avoid confusion and gain the best results possible.
What results, exactly? The positive results you will experience when you put these rules into place in your business. That is what this series is all about: determining the cause of your business issues (This can be any number of things, some of the most prominent are listed here: The Business Plan that Never Fails) and the effect that following these Marketing Rules can have on your business.
In rules 4, 5 and 6, we cover some of the opportunities that help determine the cause and effect, and why it is so important to respect the process:
Rule 4: Develop Marketing and Sales Goals
Goals are critical to your success because they give clarity to everyone.
When setting goals, to ensure you are setting the right ones make sure your goals are:
- Time Specific
Remember to make clear objectives, instead of setting the goal of more sales, set a more specific objective of increase profit by 25% or increase market share by 20%. Objectives are a clear and tangible measurement. You have clearly set a target for your team.
Goals need to be measurable and actionable. Focus your action plans with creative brainstorming and research.
Have a timeline that is reasonable and obtainable, this will help you rally your team to help you achieve what you have set. Developing your marketing grid in the sales workbook would highlight goals such as; number of leads, number of appointments, number of new clients, qualification of lead, average sale amount, products or services sold, sales conversion rate, dollars in the pipeline and of course, revenue collected.
Rule 5: Develop a Budget and Return On Investment
A budget is an educated guess that relates spending to activity to revenue. The benefits of developing a marketing budget are:
- To control expenses and improve revenues
- To help assist in the coordination of marketing activities
- Sets the standard of performance, that keeps marketing focused on results
- Allows tracking and change your marketing based on success or failure of each tactic.
- Understand the value of a customer and the return on investment in acquiring them.
Return is the marginal net worth of a customer calculated as the average amount of the first sale, less direct costs, plus the number of purchases over the next year. Example: first purchase is $1000, less cost of goods (40%) or $400, additional two purchases of $200 at 50% gross profit is $300, a first year marginal net worth is $400 plus $300 equals $700.
Investment is the marketing cost of obtaining that customer. For example; a cost of $300 in marketing to sell one customer.
Return on Investment in this example is $700 gross profit less cost of marketing $300 equals $400. $400 divided by cost of $300 investment is 133% return on investment.
Return on Investment is the optimization of marketing spending to measure the profitability of a marketing strategy. The formula for Return on Investment is:
ROI = (Gain from Investment (or Gross Profit) – Cost of Investment)
Cost of Investment
Huge profits can be created by applying ROI thinking long term. Customer value is profit accumulated over the life of the relationship. Therefore, marketing strategy spending is seen as both an expense and an investment. The expenses are those costs associated with attracting attention, the early lead generation efforts. These expenses are measured in terms of quantity (how many people responded to your message). When you look at marketing as an investment you are looking at the costs from taking a generated lead and then transforming it into a qualified sales lead – a lead ready to be handed to your sales people. This is measured by quality of the lead generated from your marketing system.
Rule 6: Follow Up with Nurturing Tools and Methods
Research has shown that on average 5-10% of new sales occur on the first promotion or two sales contacts, but 70% occur over time. A business can spend a lot of money in advertising but still lose money because they don’t follow up and close that 70%. Market timing is key. The more potential customers in your database the greater your opportunity to grow sales when they are ready to buy.
If you spend $5000 in advertising and close 10% of those sales, you get one result. But if you follow up; you could over time increase those sales leads to a much better result. Lead nurturing is critical to establishing and maintaining good relationships with present and future customers. Nurturing is a marketing technique essential to completing sales and building future sales.
Nurturing should keep those qualified customers that are not ready to buy now, primed for buying in the future. Instead of giving up on those customers that don’t buy now, you build a pipeline of interested customers that will buy in the future. Through diligent, consistent nurturing, you will position your company in the customers top of mind awareness, so when they are ready to buy, they will come to you.
Here is a list of ways you can keep qualified customers in your nurturing system
- Emails providing useful information on a regular basis
- Always follow up requests for additional information with a telephone call.
- Quotes and proposals need to be followed by a telephone call.
- Newsletters about what is new or blogs that educate
- Telephone surveys or industry research
- Direct mail may be another tactic used to keep your customer informed about your products and services.
- White papers that educate rather than sell
- Birthday cards or just thinking of you messages
I’ve said it before and I’ll say it again…I want your comments! What did you find most useful? What works best for you? Have questions or just need help? Call me at 989-791-2475 Ext. 13 or click here to email me.