Advertising costs in some media can be astronomical and still be largely ineffective- and yet, better than nothing. Here are some ways that you can improve your marketing process to drive business and build profitability (not just income).
The first thing you need to do is identify some measurable parameters to work within. Measurables in advertising can be difficult to find: for example, how many people came into your store because of your television ad? One measurable you can use is to take your overall marketing expenditures and divide that by the number of customers you have. Although you’ll already have some customers who buy from you because they’ve always bought from you and you’ll have some customers who are there because of free word of mouth referrals, it at least gives you a baseline to start from. Once you have that number, divide it into the average income per sale. This will tell you how much of every sale was spent to get that person to show up at your store.
Now that you know how many cents (or dollars) it takes to make one sale, you have a good decision-making guide to help you test your marketing effectiveness.
Next, identify the benefits your primary product or service or business concept provides (low prices? best service? best value?). Decide what medium you want to market in and design an advertisement specifically around that marketing message.
Next, test the message with a focus group. What are the responses? Do they recommend a small adjustment? Is it ready to go as it is?
When you’re happy with it, release it to the world and measure the response. If it’s successful, repeat it. When you have a 3 month average number of the marketing cost per dollar of income, you can add a new marketing effort to your cycle using your new (increased) baseline as the number to improve. If, however, after 3 months you discover that the number of customers went up but your profitability decreased (because your marketing efforts were too costly) it may be time to re-think your current strategy.
Consider all forms of media in this process, from television and radio (the “traditional” methods) to online methods including blogging, podcasting, and pay per click advertising. You may find that for your business one works better than another.
Remember: don’t just compare the number of customers coming in the door, but always consider profitability; compare the money you spend to get a single dollar of income. Your goal is not only to increase the income but to decrease the money you spend. Thus, a ten-cents-on-every-dollar marketing cost might be reasonable for your business, but if your income goes up, make sure your marketing costs at least stay the same or even decrease.
As a way to further enhance the success and measurability of your marketing, build into every effort a way to get ad-specific customer responses. An example of this in action might be when you hear “mention this radio ad and get and additional 10% off” or you when you see “bring in the ad and get a free bonus!”