I wanted to share with you three metrics (numbers) you must measure for your “marketing score board.”
As I have in previous blogs, I am going to emphasize the theme of simplicity. Complicated metrics will just overwhelm you. You’ll use a simple score board. What’s more, a simple score board will help you to successfully scale your marketing efforts and grow your sales.
Start by measuring just three numbers. That’s right—just three numbers. Here they are…
Number One: Your “Cost per Lead”. Just measure the total cost of a particular marketing tactic (e.g. Pay-per-click advertising, direct mail, trade show booth, etc.) and divide that by the total number of leads that tactic generated in a specific period of time. So if you spent $10,000 on a direct mail campaign that generated 100 new leads, your cost per lead is $100 per lead ($10,000 / 100 leads). Knowing your cost per lead helps you compare which lead tactics are most cost efficient, and gives you feedback so you can refine a specific lead generation tactic to perform better. Plus, any big change in your cost per lead can be a critical leading indicator (good or bad) that you must pay attention to in your business.
Number Two: Your “Cost per Sale”. This measure is simply the total cost of a particular marketing tactic divided by the total number of sales you made from that tactic. Continuing on with our direct mail example, imagine that of those 100 leads you got from the direct mail campaign you closed 10 sales, that means your cost per sale is $1,000 per sale ($10,000 / 10 sales). Knowing your cost per sale helps you get a sense which marketing tactics yield leads that are higher propensity buyers.
Number Three: The “Dollar Sold per $1 Spent on Lead Cost”. This final number is a powerful way to equalize various marketing tactics so you can see which one has the greatest return on investment. For example, with the direct mail example, if your 10 sales each purchased $10,000 from your company, that means that your $10,000 investment in the tradeshow yielded $100,000 in gross sales (10 sales x $10,000 per sale). In this case your dollars sold per $1 spend on lead cost would be $10 ($100,000 in total sales / $10,000 in lead cost for those sales). In essence this means you had a gross return of 1,000% on the money you spent on the direct mail campaign. Depending on your margins, and how much future business these ten customers will yield, and a few other factors you’ll know if that return on your marketing dollars for the direct mail was a good one or not.
Again, keep it simple.
I hope today’s blog gave you some profitable ideas to improve your business’s marketing.
If you ever need help to build your business faster and to make it less reliant on you the owner, please reach out to us—we’d love to help you do it smarter, faster, and better. You can visit us online for more information on our Business Coaching Program.