This presentation will show you exactly how to create a cost-effective marketing plan. Some of the topics covered include:
Most businesses will fail, barely get by, or suffer from low profit margins. The ones who prosper will be those who successfully market and advertise their businesses.
The key word above is “successfully.” The reason why is because simply making the decision to market is not enough. A small business owner cannot expect results by doing what a major corporation does.
The first step in all marketing campaigns involves crunching the numbers to find:
The first step in creating your marketing strategy is first deciding how much a customer is worth to you. This is a quite simple process, that will also tell you how well your business is operating. Answer the following questions:
Number of Referrals
Purchases During Use *
Worth of Referrals =
Purchases During Use +
Net Profit =
Net Profit Per Purchase *
New Customer Worth =
Now it is time to define a growth object to gain equity position. Growth Objective is simply, the number of customers needed to reach profit goals. An Equity Position is met when your target market thinks of your business first when looking to buy those products you offer. Answer the following questions:
Average Ticket =
(Gross Sales / No. Sales Per Year)
(Sales Opportunities / No. of Sales)
Avg. Floor Count=
(No. Sales / Closing Percentage)
# of Competitors
Competitors Floor Count
Total Prospects from Competitors
Projected Gross Sales=
(Growth % * Gross Sales)
(Profit Goal – (Est. Profit / Avg. Ticket))
Additional Prospect / Yr. =
(Add. Sales / Closing %)
At this point we have not only found Customer Worth and how to reach Growth Objective, but also we have an idea of what factors are important in gaining profit.If you look closely you’ll notice how important Closing Percentage is, and may be wondering how to up that number? I will be covering the writing of effective advertising copy later.
Now let us get back to number crunching. We now must find out what a cost effective ad budget looks like. Most ad companies will tell you that it should be around 5 to 6 percent. I however believe companies are different and instead we will base our budget on markup and location.
We will look at markup, because advertising must work harder if your prices are higher. Put simply, the price conscious public won’t buy a more expensive product unless they see some added value in doing so. Advertising will give them that added value. 80% or more of what you sell is marketing, not the product itself. So, if people are buying marketing off of you, you best sell it!
Also location is important, because a business paying a great deal for prime customer traffic need not spend as much for advertising as one that is harder to find.
Advertising % *
Avg. Markup *
Occupancy Cost –
Analyzing the Numbers
Now we have found all of the below:
It’s now time to bring these numbers together. The two most important numbers above are, “customers available from competitors”, and “additional customers needed.” Make sure first there are enough customers available to reach goals. If not the goal you set is too high and should be adjusted between 10 to 30 percent growth relative to your industry.
If your profit goals are in line then it is time to put your ad dollars to work. This will be done by choosing the proper mediums. You should use mediums that will allow you to build a consistent, aggressive and yet cost effective ad campaign.
I hope this article helps you to cost effectively market your business. If you have any questions ask them in the comments below
Till next time…