Where should I spend my marketing budget?
With so many pressures and options available to advertise it can be a very worrying time trying decide the right way to spend your hard earned marketing money. The consequences of getting it wrong could be devistating to the business.
It is so very easy to be seduced by the seemingly attractive advertising deals we are offered every day and then feel really bad about it when the exercise hasn't produced any significant new business.
So how can we avoid the same mistakes in the future? Well firstly we need to be a bit more scientific.
If you have an established business you really need to know where your business comes from now. If you don't know, then call them up an ask.Was it a Yellow Pages ad, the local paper or maybe a Google search. If you are new business make sure you ask this question of every new customer from day one.
This should reveal some sort of pattern. You should then cross reference that to the volume or value or sales from each source. Take into consideration the nett profit from each one so that you have factored in any discounting you may have had to include for different market channels. By this I mean, for example, that you may have to discount heavily to make internet sales reducing the margin and requiring many more sales to achieve the same profit level.
This exercise should give you a good indication as to the best source of profitable business for you and the potential profit from additional sales you might achieve.
Now you can do the sums. If I increase my advertising spend by 'x'% in a specific area I need to gain 'y' additional sales to make a profit.
This where it gets messy. There is no guarantee that that addition investment will produce that much extra business. You be extracing the maximum from that source already. So you have to be careful.
So here's a Golden Rule.
If you want to experiment, treat it exactly as that. Test with a short term trial and measure the results closely. You may not get the 'great deal' they are offering for a substancial, long term, commitment but I could save you thousands if it doesn't work out. They will always be prepared to negotiate again if you know the advertising works for you and you are happy to sign up long term.
Test and Measure is the bottom line.
Try out new marketing avenues in the same way. Dip your toe in the water, measure the results and be sure of the nett profit you are achieving from that business. If the numbers stack up then go in little deeper. If it produces bad business ditch it.
One final thought. Things change. Customers change their ways of looking for suppiers. Adverting mediums come in and out of favour. Be prepared to test and measure the new, and old, to attract new customers. Don't put all your marketing budget in one egg basket because things WILL change ad you will loose out to your more flexible competition.
©AlloyCRM 2007
