Remember John Wanamaker’s famous line: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”? As ridiculous as it is, this statement is the motto of many small and medium-sized businesses that still see marketing as some kind of ephemeral science. Not knowing and not understanding what marketing metrics really need to be measured when conducting marketing activities, companies are really throwing money away. And to analyze them is absolutely not difficult; the main thing is to do it regularly.
Allocation of investments for marketing
Marketing investment allocation is the basis of marketing planning. You can do as Wanamaker (as many entrepreneurs do) and say that I spend $500 a month on marketing, but how they are used – I do not know. But then you shouldn’t be surprised that some of it go to waste. You can get a true evaluation of your product or service from your customers. For example, https://upreview.co/ can help you to get real reviews from people who have contacted your company. You should prescribe in advance in the marketing calendar the budget allocated for marketing purposes, showing how much of this money is used in a particular marketing channel and actually what results you expect from each campaign. That way, you can identify and invest in more effective channels of engagement.
The cost of attracting a customer
Knowing this figure, you can anticipate potential efficiencies for any customer acquisition channel or campaign. After evaluating the results, you can discard ineffective types of marketing and give all your attention to the most profitable. Calculating how much it will cost you to attract a client is quite simple. To do this, split the amount of the advertisement campaign (that is, the amount of marketing investment in a particular channel to attract customers) by the customer base you were able to attract in this way.
Return on investment period
If you want to know how long it will take to recoup your investment to expand your customer base, pay attention to some important indicators. Among them, it is worth considering the average value of the number of sales. This figure can be found out quite simply by taking the sales statistics for the same period last year, or for the previous month. The average amount of sales is calculated by dividing the number of sales by the number of customers who made a purchase.
Equally important is the use of the markup and its difference from the primary cost of the product, as well as the number of purchases that go through your company in a year. After reallocating investments, you need to analyze how much each of the key indicators have changed. Only after that, you can determine the most effective proportions of marketing budget distribution for each channel. In addition to these three indicators, there are equally important marketing metrics that should also be measured regularly. These are conversion and lifetime customer value.
Conversion and lifetime customer value
Conversion shows what percentage of potential customers who responded to an advertisement made a purchase. The higher the conversion rate, the better your company’s sales and marketing system work and the higher the profit. On the other hand, a low conversion rate shows that you have a failure at one stage of the sale. You need to make sure you understand at what stage the customer is “dropping out” and think through actions to increase the conversion rate. The value of each of your customers indicates how much profit the customers will make for your company over the time they use your services or products. This metric really makes you love your customers once you know how much money they can bring your company.
Marketing investment allocation is the basis of marketing planning. You can do as Wanamaker (as many entrepreneurs do) and say that I spend $500 a month on marketing, but how they are used – I do not know. But then you shouldn’t be surprised that some of it go to waste. You can get a true evaluation of your product or service from your customers. For example, https://upreview.co/ can help you to get real reviews from people who have contacted your company. You should prescribe in advance in the marketing calendar the budget allocated for marketing purposes, showing how much of this money is used in a particular marketing channel and actually what results you expect from each campaign. That way, you can identify and invest in more effective channels of engagement.
Knowing this figure, you can anticipate potential efficiencies for any customer acquisition channel or campaign. After evaluating the results, you can discard ineffective types of marketing and give all your attention to the most profitable. Calculating how much it will cost you to attract a client is quite simple. To do this, split the amount of the advertisement campaign (that is, the amount of marketing investment in a particular channel to attract customers) by the customer base you were able to attract in this way.
If you want to know how long it will take to recoup your investment to expand your customer base, pay attention to some important indicators. Among them, it is worth considering the average value of the number of sales. This figure can be found out quite simply by taking the sales statistics for the same period last year, or for the previous month. The average amount of sales is calculated by dividing the number of sales by the number of customers who made a purchase.
Equally important is the use of the markup and its difference from the primary cost of the product, as well as the number of purchases that go through your company in a year. After reallocating investments, you need to analyze how much each of the key indicators have changed. Only after that, you can determine the most effective proportions of marketing budget distribution for each channel. In addition to these three indicators, there are equally important marketing metrics that should also be measured regularly. These are conversion and lifetime customer value.