Often when it comes to marketing, many succumb to “hoping” to build their brand through widely distributed, “feel good” and “clever” campaigns.
More often than not, this results in spending a lot of money, without ever knowing if a single dollar was worth spending.
It’s a horrible standard to run marketing by, but unfortunately, many fall into the trap of marketing like mega corporations who have millions to toss around.
Chances are, if you spend $1.00 on marketing, you’re wondering when you’re going to get that $1.00 back, and hopefully it will be more like $1.25, or even $2.00!
But ROI driven marketing doesn’t rely on “thinking” things are working. It looks to make decisions based on numbers.
With that in mind, let’s a take a look at two different approaches:
The difference between that two is that one is a shot in the dark “Maybe this will work, but I’ll never know for sure!”
Versus the second option, where you will know with certainty whether a specific campaign is worth investing more money into. Even if you continue to run an unprofitable campaign, you can tweak specific parts of it until it becomes profitable (which is often the case).
So for example, let’s say you spend $5,000 one a new campaign. Since you are now measuring every step below, here’s what it looks like.
Now for $5,000 you won 2 new clients.
Let’s say each client purchased an individual tax return, for $250.00
$500.00 upfront, so year 1 would bring in $500.00. Over the course of 5 years, that’s $2500.00.
Which is not only Not Profitable, it takes a long time to even recoup 50%!
So what can we do?
Here are some questions you can now ask with this data:
- Are we targeting the right audience? Only 57 out of 1000 responded…
- Do we have a compelling reason for them to respond? How can we improve it so 57 can increase to 100+?
- Can we do a better job of engaging? 10 out 57 might seem low, why not shoot for 15 or 20 out of 57, which should lead to 7.5-10 meetings, and 4 new clients.
- Can we sell additional services to those who come on board, so instead of a average transaction size of $250.00, how can we add value to the offer to increase price or additional options?
From here, you can take a look at the numbers, and see what’s missing.
Perhaps you placed an ad a financial magazine, geared towards savvy professionals. You’ve seen other ads work well here, so you feel confident it’s not the placement or the channel, but something else.
So you can look at the main call to action of the ad “Take our free consultation today”
You realize, in hindsight of course, that the ad doesn’t speak to your market, doesn’t give them any real benefit.
So you can run another ad with “Free Tax Analysis Report. Discover If You Pass the “Hidden Money” Test”
So instead of 57 responses, you get 107.
So now you get 20 forms filled, 10 meetings, 4 clients at $250.00 each. That’s $1000.00, and will be profitable in 5 years.
Better, but unless you can wait 5 years, really not profitable (still!)
Ok, so we take a look at the funnel and marketing flow again.
What’s missing? What can be improved?
Two ideas come to mind, you try to increase the number of people who take the questionnaire and those who schedule a meeting. Right now, they fill out a form and have to call the office. We believe this causes friction, and hence lowers our numbers.
So we create an online form where at the end of the questions, there is a calendar where they select 3 times they’re available to meet! Then we just follow up with a call to confirm.
So we test it, and get a bump from a 50% conversion to 75%, so instead of 10 meetings, we get 15. So instead of 4 clients, we get 6. Now we get a return of $1500, which is almost profitable in 3 years.
That’s still a LONG time to wait for ROI.
And after all this work, the problem becomes painfully obvious … our offer is just too low to justify the marketing spend.
So we either stop running the ad, or figure out additional services or options to offer new clients.
After listening to Growing Your Firm Podcast (obvious plug :-), we realize that many firms offer 3 “packaged” services and decide to slightly increase the price.
So we decide to try to package our service in this way:
- Basic: $300.00, includes initial consult and follow-up report
- Silver: $500.00, includes initial consult plus 1 tax planning session.
- Gold: $800, everything above plus 2 tax planning strategy sessions throughout the year
We now run the campaign, and find that 1 person purchases Gold, 2 Silver, and 3 purchase basic. At this rate, we recoup our marketing dollars by the second tax season!
Now we can continue to tweak numbers, add services, and everything else until we perfect the process and make our money back on the next purchase.
But now you can see how true, ROI and metric driven marketing works.
It’s informed by numbers, and the “art” is in the offer and positioning.
Rarely does a campaign become a “home run” on the first try, but that’s what all of us expect to happen.
To put in bluntly, that’s not happening.
But if you measure, learn, and tweak, you can build out very profitable campaigns sooner than you think.
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