Do the Math Before You Market

Alright, I promised a content discussion today, but I've been distracted once again by the crack that is Mahalo Answers. Mr. Wall turned me on to the site and now I'm obsessed with presenting my marketing knowledge there.

Today, I found a rather vague question about how to effectively market a business, but it made me consider how many times we forget the simple basics. Too often I see people making decisions based on gut or raw traffic data, without first figuring out how many actual customers we need to stay profitable.

So I answered the question like this:

"I'm assuming you are on a tight budget or you wouldn't be asking this. So let's say you have high-ticket services and need less than 20 customers in a given year to be profitable. In this case you would be best served by carefully identifying your target and investing in personalized communications via the most acceptable medium. (Mail, email, personal contact, social media interaction, etc.)

From there it's a game of math. If we need to convert 20 sales, we need to first look at past conversion data. But let's assume you are pretty good at closing the deal and you sell through 20% of your leads. That means you need 100 leads during a given year.

Backing that out further, a good rule of thumb is a 1% response rate for a marketing program. (B2B usually pulls much better, but let's be conservative.) That means you need to contact at least 10,000 individuals. Now it's just a matter of applying your marketing budget against this number to determine how much you can spend against each prospect to generate the leads and conversion you need in order to succeed. And, of course, in the process you can assign differing values of spend against the potential value of the lead.

This same math should rule your decision making if you need high volume as well. Only now it's more about traffic and impressions, rather than individual contacts. But always start with the basic math to see if you are spending your money as wisely as possible.

One last point is, never forget your brand. Always carve out a portion of your marketing spend to develop and enhance the image of your company. Then infuse this brand into everything. Sales meet your objectives today. Brand helps you build toward even greater sales in the future."

Now obviously, your humble host of The BeanCast is not a math genius. I run marketing podcast, for God's sake. And I certainly can't do the higher-end analytics calculations that true experts in response can do. But it's not rocket science to at least determine the basic needs of your campaign. So today's lesson children? Do the math!

And for those of you going, "Duh." Get over your bad selves. ;-)