Of course, you shouldn’t really guess. Much effort is spent on tracking and proving which half is working. As a small business owner, if you’re spending ad dollars and NOT measuring basic key metrics yourself, I urge you to start. If an outside firm is showing you the “power” of your ad dollars, don’t be afraid to ask questions.
If you own a small business, never spent ad dollars before, hired a firm to help you advertise, then spent what you view as a small fortune on advertising, you would expect results, correct? Other marketing firms boast how their approach “doubled customers” or “increased sales 50%!” Can’t argue with those results… or can you?
Let’s say a small business normally has 10 customers a month, and want to grow that number. They listen to the advice of a marketing firm (or media outlet) and start advertising. They spend $5,000 on radio spots. This advertising brings in 10 new customers that month, and each customer spends $225, which we’ll say is 50% more than a normal customer would spend. The marketing firm has doubled the customers to 20, and increased sales by 50% ($2,250) for this business for the month.
Wow – Doubled customers and increased sales by 50%! However, if we REALLY look at the numbers, you see the business actually LOST $2,750 in acquiring those (10) new customers. They spent $5,000 on ads, which generated (10) new customers, and $2,250 in sales, for a net loss of $2,750. The “headline” is – “Doubled Customers, Increased Sales by 50%” - but when you read the article, you realize the news isn’t so bright.
Don't be misled by fantastic headlines and gaudy numbers. There is no magic formula. Going from $0 ad dollars to ANY ad dollars should have an impact on your business. Make sure you look at the numbers carefully, and be sure you have a marketing partner you can trust.
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Random thoughts, comments & opinions.