I was with a client yesterday and during the session introduced the Formula for Change.…
Every business, small or large, advertises in the hope of finding new customers, yet at the same time most view their advertising as an expense rather than an investment.
As any business owner knows you get returns from investments, not from expenses, so understanding that you’re investing your advertising pound in the hope that it will bring you a return is the only way looking at your marketing and advertising that makes sense.
Unfortunately this thought process happens too seldom because in the average business, the owner has little if any idea what the return on their investment is.
Too often the average SME owner doesn’t take the time to measure the response that each marketing piece generates, leading to that uncertainty. Sure, you might think your latest radio ad which you spent £2,000 on is drumming up business, but what if it’s your social media, that you spend virtually nothing on, that is generating the leads for you?
If you don’t know what your resources are doing for you, how can you ever really know how to use them most efficiently?
If you were to invest your money in shares or property you’d most likely keep a very keen eye on what returns you were getting from that investment, wouldn’t you?
So why doesn’t the average business owner look at their marketing in the same way? After all it’s a helpless feeling when you aren’t sure whether you’re getting any return at all from the money you invest.
So how do you find out what return you’re getting from each marketing piece?
You simply ask each customer who calls or comes into your store how they found out about you. You then record their response and calculate how much business each advertising effort generates.
Yes it will be time consuming and you may not get every single customer right, but it will give you an idea of what works and what doesn’t and you can move forward from there, deciding which campaigns and materials are worth keeping or updating and which can be binned.
But most importantly once you’ve worked out the marketing campaigns that are making you money, or at least paying for themselves, and the ones that are costing you money, you’ll be able to stop throwing good money away and start to increase your profits.