It is of paramount importance that all marketing strategies should be tested and the result obtained through those tests should be evaluated. If the results of the test are positive, you can go for a huge marketing campaign. You would be getting a large return on investment. If the test doesn’t fair well, go for a new test. Make improvements in the test and modify it. Test again till you get better results.
It is imperative for you to go through the points below to prevent wastage of marketing resources and money.
1. Find out the lifetime value of your clients.
Lifetime value of your customers is the value which tells you how much worth a customer is to you throughout the time he remains your client. You can decide how much you can spend on a customer through this lifetime value. Suppose a customer spends 5000 Indian Rupees with you and you earn a profit of 2500 Rupees. You can invest about 5% of 5000 Rs. for that customer. If this customer spends 5000 Rs. two times in an year and continues to be your customer for three years, you earn 15000 Rs. and that would be your net profit. Now, if the same customer helps you get one more customer, your profit margin would be doubled.
So it is obvious that you would not mind investing more for such a loyal customer.
2. Find out the cost incurred per lead on all your activities related to marketing.
This is easy calculation. Find out the amount of money you spent on the marketing activity and the number of leads it generated. Here, quality of the lead generated is the only variable. You can find out this “quality” by getting the conversion rate of the leads.
3. Calculate your true conversion rates.
Conversion rate can be calculated from pitch to sale. The true conversion rate is calculated from lead to sale. Determine where your leads of best quality come from.
4. Determine your cost of acquisition. Find out the cost to get a new customer. Each campaign varies from the other in generating leads. Decide which strategies give the best outcome.
5. Define the allowable cost of acquisition.
According to the lifetime value of your customer, you can settle for the allowable cost of acquisition.
You need to be really well-versed with all these numbers involved in the marketing of your business. Avoid strategies which do not help you earn more profits and opt for tactics which give you a better return on investment.
More information at: http://www.made-from-india.com/article/5-ways-to-make-your-marketing-more-effective-while-reducing-its-expense-1138.html
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