Marketing - Method or Madness?
As summer comes to an end many businesses will start to think about marketing again.
At Co- our experience is that for many businesses marketing is a dark art, subject to impulse and personal taste. In other words we do what we like when we feel like it, without much sense of what works. Added to which, marketing experts tend to have favoured strategies, some are all about SEO, some love referrals, some promote social media and this advice can pull us off in different directions.
As an alternative to this we suggest some key concepts on which to base a marketing plan:
1. Lifetime Value of a Client.
How much is a new client worth to you? The answer to that question is the Lifetime Value of a Client which in turn allows you to make an informed choice about how much to invest in getting a client. Finding out the Lifetime Value of a Client can be a eureka moment for a business owner because it frees you up to focus on marketing. There is no definitive formula for this value but we suggest the following as an excellent rule of thumb: 'Profit you make from a typical sale to a Client 'x' Number of times they are likely to repeat a purchase ‘x’ Number of new Clients they are likely to bring to the business'.
2. Return on Investment.
Armed with our Lifetime Value of a Client we can start to assess the amount it makes sense for us to invest in getting a new one. Clearly there is no point investing £500 in getting a client with a Lifetime Value of £400. However investing £500 to attract a client worth £2,500 is an excellent return on investment.
3. Innovation, Quantification and Orchestration. One of the main reasons that marketing remains a dark art is that we do not measure what works and what doesn't. Our personalities and personal circumstances may mean that what works for another business will not work for us. Therefore we need to start measuring what does work for us. In other words if we do telemarketing - what results does it produce? If we do direct mail marketing - what result does that produce? This is what we mean by quantification. Of course before you know what works and what doesn't, you need to try some different things out and even once you have a good sense of what works, we still need to improve and develop new ideas. This is what is meant by innovation. Lastly we orchestrate our innovation and knowledge of what works into ever more systematic and concerted campaigns. In other words we have a plan.
