In the 90’s, there were a lot of businesses that did some wild spending.
For example, a casino boat due to open in the Chicago area ripped out a completed section—before they even opened—because they decided the owner didn’t like the way it looked. The renovation cost tens of thousands of dollars.
That wouldn’t happen in today’s economy. People are more limited and discriminate on what they spend on things like that. However, sometimes businesses aren’t as discriminate when it comes to their marketing dollars.
They spend money on gaining fans through social media, but don’t have a campaign in place to convert those fans into paying customers.
Or they plan a campaign to fill an event or sell a product, but don’t have an understanding of what the return will be from their marketing campaign.
Don’t get me wrong. It’s important to spend money on marketing, but you want to be in control. Otherwise you could end up in hot water. As an example, one of the reasons General Motors filed for bankruptcy protection was because they didn’t have control over their advertising.
Here at GKIC we start the year by taking a good hard look at what and how we are spending are marketing dollars. We believe in testing and spend a good deal of money on marketing, but we also believe in being smart about it. Here are steps you can take to make sure you stay in control while getting the most out of your marketing dollars.
Step one: Plan your year. Create a marketing calendar at the start of each year. At GKIC, we know a year in advance when our events and product launches will occur. We know how many and when we are going to send dedicated content emails. We know what our newsletter schedule will be and how many affiliate promotions will do. Sometimes we add or take away, but we always start with a detailed plan and you should too.
Step two: Predict your income/response from each campaign. Based on your list size and your relationship with your list, you can expect a certain response. For example, let’s say that every time you send out a limited time offer you get at least 50 people to respond. If your goal is to send these out once a week, you can predict what your sales will be for each campaign.
Step three: Create a budget for every campaign based on your estimated response. It’s important to consider whether or not a back-end product will be offered and what the total lifetime value of a customer is when determining whether you should spend considerably less, break even or even slightly more to acquire a customer. For instance, in the example above, if your product sells for $100, then you could predict that you would make $5000 per campaign based on your estimated sales of 50 units. Knowing that information means, in most cases, you won’t want to exceed $5000 in expenses when sending that campaign. However if this is to acquire a new customer and the total lifetime value of a customer is considerably higher, you might consider exceeding $5000 to run the campaign.
Step four: Build in some discretionary budget for opportunities. One of Dan Kennedy’s wealth secrets from his No B.S. Wealth Attraction in the New Economy book is to always be looking for opportunities and see what is not there. He cites Home Depot’s CEO who in 2005 was able to see two markets others didn’t see, that once added more than doubled their profits. Tight budgets cause you to put blinders on so you won’t spend money and when you have blinders on, it’s easy to miss what could be the best and most lucrative opportunities.
By having a certain amount of marketing money built into your budget that is not yet allocated, it is easier to be open to opportunity.
Two additional tips:
1) Brainstorm options to determine the most effective marketing campaigns. You have a variety of options available to you, from sending postcards to email campaigns to sales letters and more. At GKIC, we start with a campaign idea (say a five step campaign) and brainstorm with our marketing team and copywriters before we finalize it. We decide what the elements will be and flesh out what the purpose of each piece. This consistently results in new ideas and helps create stronger, more effective campaigns. If you don’t have someone to brainstorm with, consider finding another GKIC member whom you can team up with to brainstorm each other’s campaigns. Or post in the GKIC social site forum to get feedback from other members.
2) Be creative and look for what you are missing. There may be a lot of options that will be more effective for you. Testing new strategies or finding creative ways to make your marketing dollars go farther can help you increase your return on investment. For example, have you checked with publications that target your audience about whether or not they have “remnant space” available for you to test advertising in their publication? (Remnant space is last minute ad space that sells at a substantial discount because an advertiser dropped out.) Or have you considered teaming up with another business to do a joint promotion? Look outside what you normally do and be open to ideas that will stretch your dollars.
Planning your entire year, deciding on budgets for those campaigns ahead of time, and brainstorming takes more effort. However, that effort results in a stronger financial picture—one that saves you money and improves your campaign results which increases your profits.
NOTE: If you want other ways to have more control over your business, it’s in the form of your taxes. There are a number of strategies you can employ to convert taxation from a non-controllable expense to one that is controllable.
This Thursday, June 6th at 2:00pm EDT Charlie Dombeck is offering a FREE webinar for business owners on how to cut your taxes and regain control. Charlie will discuss:
- The new trend and redirected IRS workforce that is dedicating more of its resources to auditing small businesses and entrepreneurs—how this affects you and how to audit-proof your business.
- What to expect in tax increases and the revival of two dormant provisions of tax code that affect you.
- A strategic tax mitigation plan you can use to structure your compensation and benefit plan so you have the ability to drive down the cost of taxation.
To register for this free webinar and receive access details, click here.