5 Ways to Identify and Cut Wasted Advertising and Marketing
Everyone has heard the famous quote from American department store magnate John Wanamaker…
"Half the money I spend on advertising is wasted; the trouble is, I don't know which half."
Well, Mr Wanamaker was probably wrong - based on the numbers we get from clients when they first start to really measure advertising results, he was being very optimistic. It is usually much, much worse.
And even if Mr Wanamaker was right - he missed two crucial points...
1. In most businesses - with a little discipline and effort you can and should know what doesn't work.
2. The biggest cost for Mr Wanamaker was not the small (or indeed large) fortune he was spending on advertising that didn't work - it was the "opportunity" cost of not doing more of that which worked. If you know what works, and you can predict that for every £1 you invest in an Ad or marketing strategy you get £10 back - then you simply "recycle" your £1 as quickly as you can, maximising returns.
Another way to look at it is to consider two of Jay Abraham's (America's highest paid marketing consultant) ten biggest marketing mistakes...
1. Continuing to run marketing that doesn't work.
2. Failing to continue to run marketing that does work.
When we work with new clients we ask them to analyse the results they get from everything they do to promote, advertise and market their products and or services.
Typically, we find three or four opportunities to save money immediately by cutting expensive marketing that isn't working.
And we find five or six opportunities to get more new clients, more sales and more profit from activities they are already doing, which are already working, but which they seldom use.
And then there are those strategies that make modest profits which can be optimised and fine tuned for maximum profit by changing targeting, headlines, offers, copy or strategy.
When you ask the right questions (as we do), these opportunities for cutting cost and getting better outcomes become very obvious.
Here are 5 (of many) questions that we ask new clients, and which you can ask yourself. Do a 5 minute "wastage" check on your business right now...
- Do you measure cost per lead - on all of your lead generation activities? Which are most expensive, which are cheapest, and which are the best quality? You can determine "quality" by asking yourself the following...
- Do you know your true conversion rates? Many business people, when asked, will say they have "good" conversion rates and often quote 25%, 33%, 50% or more. But they are often wrong. They are quoting conversion from quote to sale. Your true conversion rate is from lead to sale. Check it out now. What you find may shock you, but could also seriously enhance your wealth.
- What is your cost of acquisition? How much does it cost to get a new client? How does each lead generation strategy compare? Typically you will find a ten times variation between different lead generation strategies such as Direct Mail, Cost Per Click, Exhibitions, Yellow Pages, Telemarketing and Networking.
- What is your allowable cost of acquisition? Many businesses overlook highly profitable marketing campaigns because they don't understand how to calculate the success. A success is an activity that produces new clients within your allowable cost of acquisition – the level at which you are prepared to pay, on average, to get a new client.
- What is your client's lifetime value? Last week a new client asked me to review a "failed" direct mail campaign. They sent 1,700 letters to targeted firms for their professional services and "only" received five requests for an appointment, one of which didn't even go ahead. Of the four that went ahead, two became clients. A very disappointing and discouraging result, they felt.
However, when they understood that each of those new clients would probably stay for four years (the average lifetime of a client), spending £4,000 per year each and that the total value of that 'failed' campaign was £32,000 in new revenue for a cost of about £1,000 in marketing. They suddenly understood that they had their hands on a potentially very lucrative marketing strategy. And when they understood that this could be done every month, generating over a year some £384,000 in future business for a cost of about £12,000 - things got very interesting. They almost "wasted" this very successful marketing campaign - because they failed to evaluate it correctly.
In our experience, this scenario is the biggest cause of wastage in most businesses - failure to identify and fully exploit truly successful (but apparently failing) marketing campaigns.
It's time to "know your numbers", do the sums and make good decisions.
Cut those activities that cannot and do not generate profits and identify and exploit those that will truly enrich you.
Marketing is not about "getting your name out there".
Marketing is not about "creating awareness".
Marketing is a not about "building a brand".
It's about Return On Investment.
When you put a pound in, how many do you get back? And, how soon?
Only when you truly understand this, and manage and develop your marketing on using the same hard headed principles that you use in other areas of your business (such as managing employees, organising and managing your factory, or warehouse, or stocks, or sales teams) will you be able to say that your business is fighting fit and ready to survive and indeed thrive in the challenging times ahead.
Your Chance to Put Your Business Under the Microscope
If you would like to spend an hour with one of our highly experienced marketing advisors, you can apply now for a free Revenue Opportunities Analysis, valued at £275.00 (but free on application).
During this intensive and focussed hour, we put your business under the microscope. Working with you, we'll identify key opportunities for cutting cost from your business, and ways to optimise the results you get from your marketing.
Many seasoned business professionals say that completing a Revenue Opportunities Analysis is the best hour they have ever spent working on their business.
What a better time to out your marketing "under the microscope"? The days of plenty and complacency as we knew them may well be over.
But a new age of opportunity may be about to begin for you and your business.
If you consider that "you don't really do any marketing" and know that now you need to – this hour will save you from making expensive mistakes and will get you focussed on the best opportunities for your business.
If you rely on your marketing to work in order to succeed – then this hour will make sure that you are fighting fit to handle whatever is thrown at you in the coming months and years.
To apply, please email firstname.lastname@example.org with your name, company, address, telephone number and website details. Denise will book suitable time with one of our advisors.