We've come across many businesses over the time who do the right thing and set goals. Along with this, they'll set budgets. But is it right to set a budget for online marketing?
This is most easily demonstrated with an example. Say you have a clothing store and you pay an SEO company to get your climbing the search engine results pages. Say for example their SEO services are costing you $500 a month. You're getting an extra 100 hits a month, however on average, only one of those 100 visits turns into a sale.
Now is when you need to ask, how much does this average customer spend each time? Let's say they spend on average $1,000. But only $400 of this is Net Profit. Basically you have spent $500 to gain $400.
If you do the math, you're losing $100 a month! Bad marketing exercise right and you should stop it immediately? WRONG! You need to take into account how often this customer will return and buy from you AGAIN. Let's say they will buy from you another 3 times that year. All of a sudden, it cost you $500 to acquire this customer that over the course of a year spends $4,000, returning you a net profit of $1,600 a year!!!
Would you now say I'll spend $10,000 this year on marketing, or will you spend every single spare dollar you have!!!
The key to this is testing and measuring. Any good marketeer or business person understands that there's no point spending money on any sort of campaign or marketing exercise, unless you can measure it's success. Otherwise you might as well be shooting fish in a barrel.
How many of you out there religiously record where every lead has originated from? Did they hear about you from a networking event, did they find you online, did they notice your car that had advertising on it, or did they see you in the Yellow Pages (I doubt it)? Getting slightly off topic now, but this is probably the reason why the Yellow Pages still exists. Businesses don't measure how many leads are generated from it, so they're afraid of cancelling their advertisements. If you knew that all of your leads had come from networking events, wouldn't you spend every spare minute going out to networking groups? Seems like a no brainer when it's put this way doesn't it!
Julian Chong - Director
Zen Online helps clients achieve their business goals through utilising online marketing strategies. Get your business found in search engine results today.
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