The Top 5 Mistakes You Can Make With Your Marketing - Mistake #1- You Don’t Know Your Numbers
Let me preface this post by saying that part of marketing IS MAKING MISTAKES. It is sometimes where we learn the most insightful lessons about what works and what doesn’t for our individual business needs. Marketing is a science and sometimes your hypothesis isn’t always correct! That’s OK.
However, we want to share a series of the top five mistakes we have either experienced or witnessed in our combined careers that we believe are avoidable and can help you be more efficient in your marketing decisions.
Mistake #1: You don’t know your cost-per-lead (CPL) or cost-per-acquisition (CPA)
Before your set your marketing budget, schedule or strategy you need to determine these two things first! We understand that tracking that information can be time-consuming and spreadsheets are not your thing, yada yada, but it is so crucial to all aspects of your business! This effects the way you should be budgeting, it tells you where you you spend the least amount of money for the best customer and could open your eyes to an audience you never expected to get business from, and most of all it holds you accountable for your marketing dollars and those you give them to. Here are a few formulas to use:
Lead Value = (Average job * Close Rate (%)) * (1-Commission Rate (%))
Lead Value is how much you can afford to spend on a lead, but doesn’t mean you should! Stay under this when shooting for a cost-per-lead, and if you go over it, you’re WAY over-spending!
Example: ($3,500 * 25%) * (1-10%) = $788 Lead Value
Average Cost Per Lead = Cost of advertising/# of leads
Take each individual marketing spend and divide by the # of leads you know or believe came in from it (could be determined by call tracking, website inquiries, asking via phone, etc.)
Example: You have a company that did 50 jobs (or bids won) for a total of $589,529 in sales over the last 12 months. You had 120 calls in for estimates, or leads. You spent $18,750 on advertising. Dividing $18,750 by 120 we get a cost of $156 per lead. This is also helpful in knowing what you would most likely need to spend in marketing in order to get, say, double the amount of leads next year.
Average Cost Per Acquisition = Cost of advertising/# jobs won or leads converted
Example: $18,750/50 = $375 cost per acquisition
Long story short, know your numbers. Consider investing in a CRM tool or call-tracking tool which makes this process a lot easier! For recommendations and more tips and tricks, contact us!
Stay tuned for mistakes 2-5 on the blog!
