I get asked a lot about whether or not a business owner should do a certain marketing campaign. I get them to ask a couple of questions to decide if a marketing campaign will be worth implementing.
The first questions I get them to ask is ‘If I implement this marketing campaign, what type of people will respond to it?’
This is not only just about the types of customers that will respond, but what will they respond with. If you have something in your ad like ‘Lowest prices guaranteed’ or ‘We beat any price in the market’ or ‘We are the cheapest in town’, you will get enquiries, but they will be more price driven enquiries that are looking for the lowest price – maybe even lower than your prices and looking to negotiate the price down further. Now, if you are looking for people who want the cheapest price, go for it, but if not, then don’t use words like this in your ad. The statistics are that only 1 in 5 shoppers are looking at the price alone. I know I have paid more to get better quality/service/convenience and others do to.
Asking this question will also let you know if you are marketing in the right place to attract the type of customer you are looking for.
The second question is then about return on investment. How many sales do you need to make to pay back for the marketing campaign.
As an example, let’s say you were putting an ad in the paper and it was going to cost you $500. Now your average sale is $100, but remember, it might cost you $50 to supply that $100 sale (even if you are in a service business). So that means we have $50 of the $100 sale to use to pay back for the cost of the ad. This would mean that you need to make 10 sales to ‘pay back’ the investment of $500 for the newspaper ad.
The question to ask – ‘Is this possible?’. If you have run an ad like this before, but only ever got 2 sales, then I’d really be thinking twice about doing it again as 2 sales is not going to pay for the ad, hence no return on investment, because really we want the ad producing more customers than just paying for the ad, we’d like it to give us enough enquiries and then sales to make more money than just the payment of the ad.
You might need to tweak the ad or make it smaller. This works with all marketing strategies. Ask this question.
Sometimes we are doing a marketing strategy or campaign that we have never done before, so when we ask question 2, we don’t know for sure if we will make that many sales. If you have asked the question in question 2 (how many sales do you need to at least pay back the ad) and it seems like a logical or achievable number, but you don’t know for sure, I then ask question number 3.
“If I invest $XX to this marketing campaign and it totally flops – I get no sales from it – will I be upset? Will I cry over the loss of $XX?”
I have a personal number that I’ll give a go on any marketing campaign. If it is under $100, I’ll give it a go – as long as it still seems logical and the number of sales I need to make is low (I don’t try anything!) – but if it doesn’t work, I’m not going to be upset over the loss of $100. If on the other hand it was going to cost me $10,000, then I’d think twice (maybe more) before giving that strategy a go because I really would be upset if I ‘lost’ $10,000 on a failed marketing strategy.
These are three simple questions to ask, but they will help you from doing silly marketing strategies, especially if you are feeling a tad desperate or emotional.
Hope they help!