It’s easy to be bamboozled by the technical complexities of digital marketing technology. There are so many statistics available you can be swamped, or mislead, by them.
In essence to run a successful marketing campaign (digital or not) you need to know:
- How much profit do you earn, on each area of activity.
- Can you afford it – even if it’s profitable.
This systematic approach will enable you to focus your digital marketing to ensure it’s performing well.
1) Find out how much your marketing is really costing
It can be difficult to know how much each part of your marketing is costing.
That’s because activities undertaken in house (or even by you, in the small hours) have costs. They range across: training, meetings, materials such as photography, travel and time that could be spent on other activities (unfortunately, marketing and time are never free).
Break down your true marketing costs into each major area of activity e.g. web development, social media, networking, SEO, PPC print advertising etc.
2) Work out how much revenue is being generated.
Work out how much sales revenue and gross profit is being generated as a result of each area of your marketing.
Unless its straight-forward it won’t be 100% accurate. That’s just life – because new customers may be in contact with you several times (e.g. trade show, networking, website, social media) before making an enquiry via your website.
Despite this you should still be able to generate good estimates of sales and gross profits by marketing activity.
Now deduct your marketing costs and you’ll have an estimate of gross profit generated by each area of marketing activity.
3) Ensure you’re targeting the easiest customers
The process of turning an enquiry into an order takes time. Sometimes the sales cycle can take years – and sometimes minutes. It depends on the customer and the nature of your service.
So estimate the time between initial enquiry and final payment to ensure you’ve the reserves to target a market.
This means if cash-flow is poor it can be better to market less profitable products and service – until you’ve the reserves to catch bigger fish.
Identify the marketing activities that result in the most profitable sales in a timescale that suits you.
4) Target the most valuable customers
Some customers are more valuable than others. Some customers may buy once. Some may remain loyal for many years and recommend you to others and are worth their weight in gold. Even if they’re a 900lb gorilla (well almost!).
But you should be able to tell how much a customer is worth to you, on average.
You can then work out how much revenue is being generated per client type. So you can target your marketing budgets at the most profitable customer type (called a “market segment”).
5) Focus your marketing
You’ll now be able to focus your marketing activity on the customers:
- Who will buy your most profitable products and services.
- Who will cost the least to convert into customers.
- Who will stay with you longest and repeat buy more often.
- And who will then pay for your services fastest.
- So that you can target them most effectively.
Focus your marketing 100% on your most attractive market segments. Only when this segment is exhausted add another segment. Then do it for the next segment. So you get the biggest return on investment.
A structured approach to your marketing will ensure your digital marketing is optimised for your needs. The alternative scatter-gun approach, will waste your time and money.