What do I mean by this comment? Let me use a recent client project to provide an answer to look at how different calculations can lead to different decisions.
As I am sure you know, the first stage in any engagement SME Needs has with a new client is to help them measure their marketing performance, providing the data they need to make decisions about what they need to do to improve their marketing performance.
I started working with this company a few weeks, after they contacted me because they had received a Growth Voucher. I must admit I was quite impressed by the amount of marketing measurement they were doing. Most of my clients were doing little, if any, measurement when I first engaged. They already knew what marketing was bringing in what sales and how much each sale was costing them in marketing costs.
What this means is that knew what was definitely working and so could continue using those channels:
- Word of mouth was generating good numbers of new clients and was costing them nothing
- their advert in a local online community cost less than £10 a time and had generated a high-spending client
- Their website was sending a lot of new clients their way
This was all great and it was gratifying to see a small business measuring their marketing.
However some of their marketing activities were costing quite a bit:
- a local magazine listing was generating clients but they were spending around £100 per sale to acquire them
- Facebook advertising was costing over £50 per new client
- Another magazine advertising campaign was costing over £200 per new client
As they are a relatively new business, they are being very careful with their resources, but they have set a target for what they wish to pay: £30. Although this is an ambitious target, it is great to see they have one.
This cost per client calculation led them to believe that the local magazines were a poorly performing route to market; for one they were right.
I took the calculations one step further: what was the cash being generating by each marketing channel?
This painted a different picture, particularly for one of the magazines. They had spent nearly £700 on advertising but it had generated over £3,500! It was actually a very profitable route to market.
This local magazine is now part of the marketing strategy they are moving forward with.
I hope this shows how marketing numbers can be misleading and lead to incorrect decisions if you don’t look at the carefully.
Of course, if you would like me to help you analyse the marketing numbers within your business, please get in touch.