You are what you measure

October 18, 2017

measureBack in the good old days, measuring your business outcomes and the impact of marketing on those outcomes was a challenge and at best, imprecise. Today, we have the opposite problem. Thanks to the web, Google Analytics, cookies, and other tools – we can measure everything. Unique visits, time on site, clicks, and so much more. But are those the things we should be measuring?

In marketing, there’s an important axiom – just because you can doesn’t mean you should. I think that definitely applies to how we define and measure success. I think that the web has made counting things so easy that we’ve forgotten what actually matters. It doesn’t serve anyone to measure just for measurement’s sake.

There are a ton of tactical things we can measure that correspond to a campaign or a specific marketing tactic. Naturally, we need to watch those too but they’re not going to tell us if a business is healthy or not. They’re only insightful to a point.

At MMG, we’ve always subscribed to the philosophy that you should have a few vital metrics (KPIs, goals – call them what you will) that are at the core of your business’ success and you need to monitor them faithfully – watching for trends, good or bad and reacting accordingly.

Every business may have one or two unique metrics but there are some that are pretty universal. This week, we’re going to look at the financial metrics that every organization should measure. We’ll dig into the marketing/sales and employee metrics next week.

Financial Metrics

  1. Lifetime value of a customer (How much does a customer spend over the entire span of working with them)
  2. Annual value of a customer (How much did the average customer spend this year)
  3. Profitability of a customer (For every customer you have, how much money did you make)
  4. Revenue mix (Amount of money from existing customers versus new customers)

Now let’s look at each of these and why they matter.

Lifetime value of a customer: This is a vital metric that tells you how much you can afford to spend to chase after new customers. It also tells you if your pricing strategies are properly aligned and what the loss of a customer is actually going to cost you.

Annual value of a customer: Ideally, this number would increase every year. You want to keep delivering more value so that each customer wants and needs to spend more with you. It should also increase year over year as your retention improves. For most businesses, the customer is much more profitable in years 2+ than they are when you’re onboarding them in year one. The exception to that rule is if you’re a high ticket, considered purchase like a house.

Profitability of a customer: This is one of the most insightful metrics possible. You will quickly identify what size and type of customers are where you make your money. You will also be surprised at the customers who don’t yield a profit or worse – you are paying for the privilege of working for them. It may also suggest that certain products or services that you sell yield better profits.

Revenue mix: New dollars are harder to earn than recurring dollars. But you also need an influx of new dollars to offset the natural attrition that every business experiences. This metric and the retention percentage that we’ll cover next week work hand in hand.

For most organizations, it’s enough to monitor these quarterly because more often than that doesn’t really show much movement. It’s like a built-in early warning system for trouble that will give you time to course correct before the damage is too deep or too expensive to fix.

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Every dollar is not a good dollar

September 13, 2017

DollarIf every dollar looks the same, how do you know which dollars are “good” dollars for your business? The reality is – every dollar is not created equal and doesn’t serve your business in the same way. In fact, some dollars actually cost you money.

Let’s say prospect #1 wants to buy something you don’t do very often and so you’re not as efficient at it as you are in other areas. On top of that, they’re in an industry that you don’t know very well. Earning that dollar is going to be slow and painful with a longer, larger ramp up time.

Even if you see that they have a big pile of dollars waiting to be spent – you might very well never get a chance to earn those extra dollars because you’re probably not going to delight them right out of the gate.

On the flip side, prospect #2 is in an industry that you know like the back of your hand. You know their jargon and quirks. On top of that, they want to buy the product or service that you sell day in and day out. You know exactly how to deliver on their need and you know they’re going to be elated at the results.

Each prospect has the same dollar. But the path you’re going to take to earn each dollar is very different, in terms of your enjoyment, their satisfaction and your potential profitability.

Logic tells us that we should:

  • Specialize in terms of whom we serve and what we offer, based on what we’re best at. We can’t know whom to serve until we know who we are.
  • We should have a clear picture of who our sweet spot clients are, based on who we are and only go after those prospects
  • We should discriminate – rewarding our sweet spot prospects for coming a little closer and making if more difficult for the not so right fit prospects to find/hire us
  • We should identify what we do best and not try to be everything to everybody. Saying no is a good thing. Having strategic partners is even better.

Logic may tell us all of that and yet – for many business leaders, sales team leaders and business owners – we can’t get past the fact that there’s a dollar on the table. We want the dollar.

Here’s the truth of the matter. I’m betting that right now you have a customer or two that you are literally paying for the privilege of doing work for them. That’s right — they are so unprofitable, because they’re the wrong fit, that you are losing money every day that you keep them as a client.

Their fees or purchases help with cash flow. It’s money in the door every month. That reality can often mask the truth underneath. You are losing money on that work. Many business owners are surprised when they crunch the numbers and realize one of their largest clients is actually one of their most unprofitable clients.

Before you go out and start pursuing new clients – I want you to evaluate the ones you already have. Crunch the numbers to see if you’re actually making money and rank your clients in terms of profitability. I bet there’s a surprise or two waiting for you.

Once you know which dollars are good dollars for your organization, it will help you target who your next customers should and should not be. Then pursue the right ones with a vengeance, knowing that each one you catch will make your business stronger and in a better position to say no to the bad dollars.

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Sometimes nothing is better

March 22, 2017

nothingThere is a required critical mass in terms of marketing. Sometimes it’s actually better to do nothing as opposed to underfunding an effort. In this conversation underfunding could mean not having enough money but it could just as easily mean not being willing to commit the time, the focus or have the discipline to honoring a schedule.

I get that this is counter-intuitive. Surely it’s better to do something rather than nothing, right? Actually, if what you’re going to accomplish is simply diminishing your resources and not really moving the needle – why bother?

Just to be clear – I am not saying that no marketing is ever a wise choice. Just that you need to be realistic about your resources and allocate them wisely.

Here are some signs that should indicate to you that maybe you’d be better off just putting the money back in your pocket and/or the time back into your day.

If you can’t sustain the effort: Marketing is a marathon, not a sprint. I don’t care how compelling your offer is, how fascinating your story is or how awesome your product/service is – marketing takes time. You can’t speed up the process of when a prospect actually needs what you sell. Sure – you can trigger an earlier purchase with a killer discount or some other enticement, but until they have decided to buy, the ball remains in their court.

Add to that the amount of marketing noise out there. It takes a while to break through the clutter. All of that adds up to the reality – if you can’t sustain something for a minimum of six months, don’t bother doing it. That doesn’t mean every marketing tactic requires a six+ month investment of time or money. But it does mean you need to be ready to make that level of commitment, just in case. If you run out of time or money short of the finish line, you’ve basically wasted that resource and not reaped any of the rewards you might have enjoyed if you could have stuck it out a few more months.

If you’re desperate: I’ve rarely seen any company make a good marketing decision when their back was against the wall. Desperation typically leads to a herky-jerky series of attempts – none of which are well thought out, executed in the best way or left in place long enough to be effective.

Prospects can smell desperation and it’s off-putting, to say the least. If you’re desperate, odds are you’ve taken your eye off the marketing ball because you’ve been so busy servicing clients or developing a new offering and now, your pipeline is dry. Sadly, there is no short fix to that other than to learn your lesson and make marketing a daily activity – even on the busiest of days so the pipeline always has some flow.

If you’re just going to talk about yourself: Until you get it through your head that marketing should always be about, for and in the voice of the consumer, you might as well not waste your money or time. They only care about us in the context of their work or their life. If you can’t frame your marketing to help them understand how you can enhance some aspect of their world, don’t bother.

That’s not to say you never mention what it is you sell. But marketing is about gaining their interest and their trust. That’s accomplished through being helpful, not through selling. They’ll let you know when they’re ready to shift the conversation to sales.

Marketing is something you should do every day but that doesn’t mean every possible tactic is a good choice. Watch for these red flags to avoid spinning your wheels for nothing.

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Help – my digital display ads aren’t working

February 22, 2017

Digital Display Ads

I recently got an email from a reader who was struggling with their digital display ads. They were underperforming and the business owner was considering pulling the ads.

Here’s what I said back to her.

Thanks for your email and the stats on your digital ads. You’re right, based on industry standards, your click-through rate of less than .1% is not within the gold standard of an effective campaign.

Before I dig into some of the reasons why your ads may be underperforming, remember that click-through is just one metric used to measure the effectiveness of a digital ad campaign.

With any rich media that includes brand creative, engagement rates are just one aspect of the ad’s success or failure. Many companies view their digital display ads as being a tool to drive brand awareness as well as a direct response vehicle. Unfortunately, it’s tough to measure that sort of uptick in brand awareness, which is why most people default to their click-through rates.

You also need to recognize that there are lots of ways a person can find your business without clicking on your display ad at that given moment. Think about your own behavior. I’m sure there was a time you saw a banner ad that caught your interest but instead of clicking on the ad, you did a search for the company or product in your favorite search engine, or just typed the company’s URL directly into your web browser.  The ad you saw made an impression on you and got you to take an action. You might have seen that ad on the same day but probably not. When it was convenient for you or your need escalated and you were ready to buy, you found the company and became a customer.

The importance of seeing your ads becomes even greater when we start talking about retargeting. If someone has already been to your site and then they start seeing your ads, the likelihood of them returning to your site is greatly increased.

But I do want to address your question. Assuming the main reason you’re running digital display ads is to trigger an immediate action, here are some reasons why your campaign is underperforming.

Bad creative: Regardless of the medium, creative matters. If your ads are not visually arresting, if your message is not attention grabbing or if your visuals are boring – you’ve got trouble.

Too many words: Many people cram too much into a digital ad. You need to think of it like an outdoor board. Depending on the size — seven to ten words at the most is a good rule of thumb.

Wrong websites/audience: It’s easy to place digital ads. It’s not always easy to place them in the right spots. If you can afford it – let a professional help you.

Bad offer: Keep in mind, your ad needs to offer the viewer something so compelling that I am going to stop whatever I am on the web/mobile to do and click. So it can’t be subtle, boring or unimpressive. You are trying to literally stop me in my tracks and get me to change direction. That takes oomph.

No call to action: Give me a reason to click. Offer me a free ebook, free trial, 20% off or something. If your ad doesn’t tell me what my reward is for clicking on it, odds are I’m not going to unless I was already actively looking for whatever you sell.

Digital display ads are often a very cost effective tool in your marketing arsenal. But like most tactics – there are some best practices you need to follow if you want to enjoy a healthy ROI on your investment.

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Year-end charitable giving

December 14, 2016

year-end charitable giving

Is that your hand in my pocket?  Every holiday season my mailbox is stuffed and my phone is ringing off the hook. Alas, the increase in activity is not just holiday greetings – it’s mostly people asking me for money. It’s time for the year-end charitable giving appeals.

Call me Scrooge if you will – but it’s annoying and ineffective. In most cases, I’m receiving communications from charities that I haven’t heard from since last holiday season. They’ve made no attempt to engage me throughout the year. They haven’t shared their successes with me along the way or even bothered to see if I was interested in the work they’re doing. In other words – they are shooting blind.

They have a huge list of people that includes anyone they can think of that should give, might give, attended an event 5 years ago or sold them something and BOOM – out goes the generic, “hey stranger give us money” mailing.

I sit on enough boards to understand why nonprofits feel compelled to send out a request for money between Thanksgiving and Christmas but the truth is – while they may enjoy a small surge in donations, they’re doing some damage too.

If you know that part of your organization’s business plan is to send out a year-end charitable giving appeal – let’s do some things throughout the year so your efforts drive more results and cause less of a disconnect.

Identify your target list in January: Don’t freak out – you can always add appropriate people to it – but let’s identify a list of people that you can spend an entire year preparing for your appeal letter.

I know this is counter-intuitive, but your job in selecting these people is to reduce the list, not add to it. Your goal is not to reach out to every breathing human being but to really narrow the list down to likely donors. Why? Because rather than the one gun and done method, we’re going to communicate to them throughout the year – increasing the likelihood that they will give.

Share throughout the year: You don’t want to be the nonprofit I only hear from when you want to put your hand in my pocket. So this year, you are going to work this donor list all year long. Yes, it’s going to cost you a little more but remember, we’ve reduced the list so hopefully there will be less waste and a better yield.

At least once a quarter you need to reach out to this list. Share success stories. Show them how you are spending your 2015 year-end appeal dollars (actually say it, don’t assume they infer it) and talk about your impact on the community. In short – do all of the things you try to cram into the year-end fundraising letter throughout the year. If you skip this step – you can count on mediocre results at year’s end.

Yes, I know it costs money. But you can’t expect them to invest in you if you don’t invest in the relationship. Think of how many charities are out there – and every single one sent out a letter asking for money between Thanksgiving and Christmas. Most people are going to choose one or two at the most. They all do good things to make this community and the world a better place. Sadly – those are the table stakes. If you want to make the most of your year-end charitable giving appeal, you have to do even more.

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Plant some marketing seeds

October 12, 2014

plant some marketing seedsBy the time a farmer is harvesting his crop, he’s already well into the planning of his upcoming planting season. We marketing types could learn a lot from those farmers.

The fourth quarter is a very busy time for most businesses for several reasons:

  • Lots of clients are spending the remainder of their budgets
  • Customers are motivated to wrap things up before the year’s end
  • Many companies are working short staffed and lose a lot of productivity around Thanksgiving and throughout December because of holidays and vacations
  • Internal planning for 2015 budgets and work plans is typically done during this time

That’s why it’s not all that surprising that you aren’t thinking about the sales/activity dry spell that often comes in January and February. You may be the exception to this rule, but for many organizations, the first few months of the year are often the slowest in terms of leads, sales and revenue.  That’s why you need to plant some marketing seeds right now.

It’s usually around the end of January that someone inside the company says, “Wow, our sales are really slow. We’d better do something.” They go into a brainstorming session and come up with some sort of promotion, marketing tactics or special to generate some sales activity.

Odds are, the ideas that get generated at the end of January usually start producing results 30-90 days after they’re deployed.

So if that’s the case…wouldn’t it make a lot of sense to begin those promos, specials, and increased efforts now, sixty days before your inevitable dry spell?

Let’s call it your planting seeds effort. You want to generate interest now but deliver the services/goods in January and February. How might you plant some marketing seeds now?

Offer a 2014 budget/2015 delivery deal: You know that many of your clients have a fiscal year that ends in December. They have “use it or lose it” budgets. So why not help them wisely spend those budget dollars? Create an opportunity for them to make a smart purchase in 2014 for things they’ll need in the first few months of 2015.

Put together a package: Why not bundle some of your products/services in a way that guarantees usage over the first few months of the year? Set the end date to purchase the bundle sometime in the middle of January. Begin talking about the bundles now and you’ll either sell some in December or you’ll plant the seeds now and make the sale in January.

Kick off a PR campaign: Maybe it’s time to create some buzz? That kind of buzz usually takes some time to build up so starting now means you’ll have some momentum in a few months. Be smart – concentrate on a few key publications that will position you in the right way with the right audience.

Reach out to former clients: Now might be the perfect time to re-connect with some of your former customers. Keep in mind that they’re (hopefully) doing their 2015 planning right now which might result in their realizing that they are going to need what you sell.

Develop and distribute helpful content: Depending on your industry and your customers, this might be an e-book, a white paper, a podcast, or even an in person seminar. Use this opportunity to demonstrate just how smart you are and how you can help them by sharing that expertise. Use the content to reach back out to potential customers you’ve already courted, prospects and even current customers.

Mine your referral network: Your best customers are typically more than happy to boast about your work. Now is the perfect time to ask them who else they think might benefit from your expertise/products. Set up those initial meet and greets for the first week of January.

Don’t wait until you’re in the middle of your slow season to worry about shortening it. If you plant some marketing seeds right now, the slow season may be a thing of the past.

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5 ways to market if you don’t have a lot of money

August 25, 2014

ways to market if you don't have a lot of moneyNo matter where I speak, who the audience is or even the topic I am supposed to address, this same question comes up:

How do you market your business if you don’t have a lot of money?

Well, the short answer to that is you’d better find some resources for marketing or you are in a lot of trouble. But, that doesn’t mean they all have to cost an arm and a leg.

In the meantime, while you’re scraping together the money to spend on marketing — try this budget friendly tactics.

Hang out where your potential customers hang out and be helpful. Do your clients read certain blogs? Then be there and share your expertise. Do they all run in local marathons? Be there, handing out clean, dry socks with your logo on them. Do they go to industry trade shows? Be there and host a free Q&A about their biggest problems. Don’t wait for them to come to you. Go out and find their watering hole.

Know your perfect customer and only take work from them. This requires incredible discipline but pays big dividends. Rather than taking clients for cash flow, ONLY take on those clients that you can delight. And who delight you by paying you a fair price.

Create a referral network by delivering the first referral. When you help someone, it is human nature that they want to return the favor. Why not set the example by making an incredible connection. Now of course to do that…you need to know who their perfect customer is. Which means you get to have a very meaningful conversation that’s all about them. See how the human nature thing is going to work?

Use handwritten thank you notes to show your appreciation. In today’s high tech world, a personal gesture like a handwritten note means a great deal. It doesn’t have to be long or fancy. Just from the heart. And if you can’t thank a client from the heart, you should fire them before they fire you.

Let them have a taste. Sampling is one of the most effective marketing tactics around. There is no substitute for actually experiencing your product or service. This is your greatest opportunity to earn their trust and their business. So do it right.

I can hear your collective gasp. Give away what you sell? Sampling is a golden oldie in terms of marketing tactics. The biggest buying obstacle any business has is the uncertainty of that first time.

Why not leapfrog over that worry by just giving them a taste? Walk through any grocery store or big box store on a Saturday and watch the marketing tactic at work.  This works just as well for service-based businesses even though they don’t have a physical “thing” to offer.

Bottom line on how to market without spending a lot of money – know who you can help the most and be relentless in your efforts on their behalf. Be generous and be grateful.

I know…I didn’t even mention social media or direct mail or cold calling.  Trust me.  If you try these 5 ways to market if you don’t have a lot of money — the rest will fall into place.

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Twitter and Facebook ROI

July 8, 2012

This has to be one of the biggest questions banging around marketing conferences, blogs and social media gatherings.  “How do we measure the return on my investment (ROI) for the time, money and effort we put into Twitter and Facebook?”

To truly answer that question, you need to define your own ROI. If it is a dollar for dollar equation, then you need to be able to quantify/tie a value to the time spent, calculate the dollars invested and then put the proper tracking/measurement tools in place to link your social media contacts/connections to actual sales.

Are sales the only worthy ROI?  Probably not. Like all marketing — you start by knowing what result you want.

  • Are you trying to create a community that will tell the world about your new book, product or ?
  • Do you want people to sign a pledge or commit to a cause?
  • Do you want email addresses because your sales cycle requires a lot of education and time, so you want to create a drip campaign?
  • Do you want to identify like-minded business people so you can create a safe place to generate thought leadership?

I have nothing against sales.  It’s how we all pay our mortgages.  But I just want to remind you, there are many worthy outcomes of any marketing effort.  And that’s certainly true of Twitter and Facebook. As Stephen Covey taught us, begin with the end in mind.

This infographic from InventHelp (click here to check them out) begins to dig at the question and explore potential answers.  Take a look at it and then tell me — what do you want from your social media efforts?

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