When speaking with small business owners about how to grow their business, marketing forms part of the discussion. While most have their thoughts on whether or not their current marketing is working for them, few really know.
They key issue here is whether or not the results achieved are actually value for money?
Which scenario is ultimately produces the better results?
- Lots of new customers each making small purchases
- A small number new customers each making larger purchases
In reality both can be effective and fantastic value for money.
Let’s assume you plan to spend $5,000 on some new form of marketing.
If the campaign generates and additional 100 new sales most small businesses would consider this to be a success. But what if the average spend of each of the new sales is $50 each? You will only have recouped the cost of running the campaign. Factor in the cost of running the business and ultimately, the campaign is most likely caused the business to lose money.
What if the campaign generates just 50 new sales but they average of $150 each? Income increases by $7,500. As per the first example, depending on the cost of the product of providing the service the campaign could ultimately still not work out on the positive side of the ledger.
Many small business owners will compare the headline numbers of new sales and naturally assume 100 is better than 50 without considering the value of the revenue generated. In the long-term if the 100 smaller customers make repeat visits this can still yield better results long-term. But what if the 50 make return visits also?
The underlying point is unless we are tracking the number of new customers and the income generated from each of them we really don’t know if our marketing is working for us or not.
Also, unless we have a good understanding of the cost of selling our goods or providing our service, we really don’t stand a chance of knowing if our marketing is working.
What are you doing to work out if your marketing is working for you?