Assign marketing budgets that break the bank!
Let's start off with some basic principles. You need to sit down and answer the following questions, if you really want to create a marketing budget that maximizes your profit.
What is your average annual turnover? ......._______A How many customers do you have?................______B Customers less than a year old............______C Customers more than a year old .........______D What is your net profit margin? (%age) .........______E How many leads do you generate each year? ______F How much do you spend on marketing? .........______GIf you can convert more leads, by targeting better and closing more sales, then you will reduce your customer acquisition cost. I guess most of you will know where I am going with this, but it is remarkable how many people have not even done this basic exercise. In another article on CRM, I will refine this further, by helping you find out who your most profitable customers are.
OK, let's do some simple mathematics. To get how much each customer is worth to you do the following.
Customer Worth = (______A * ______E) / ______B - this is the Euro value of what each customer contributes to your wealth fund annually.
If you spend less than that on each lead, then either you are doing very well, or else you may need to spend more. Some marketing pundits, who want your money, suggest that you can afford to spend all of your profits, after your own salary, getting new leads. Personally 10-20% spent wisely can yield even better returns, as your business grows.
So how much do your customers actually cost to get?
Customer Acquisition Cost = ______G / ______C is this more than 20% of your Customer worth? If it is we need to look at two key things the first is your
Lead Conversion Ratio = ______F / ______C. If you can convert more leads, by targeting better and closing more sales, then you will reduce your customer acquisition cost. What's more, by analyzing which lead campaigns were successful insofar as they had the highest lead conversion ratios, you can target and focus better.
Conversely you could spend less on trying to get new customers, now don't just cut your budget, get a lot smarter in how you operate your lead generation programs!
So let's look at your existing customers. Are their ways that you could sell more to them? Sell additional products and services? It is said that it costs at least 5 times as much to sell to a new customer as it does to an existing customer.
Existing Customer Worth = (______A * ______E) / ______D
Simple mathematics again, either increase your existing leads generation budget by 1/5th and double your sales, or significantly reduce your lead generation budget and get better results and spend some of the savings on up-selling to existing customers.
In conclusion, by operating a smart lead generation campaign for customer acquisition while continuing to sell to existing customers, will reduce your marketing budget, increase your sales' revenues and break the bank with profit.
Source: Free Articles from ArticlesFactory.com
Related Tags: marketing, break, budgets, the, that, assign, bank!
This article was written by Peter Lawless, founder of 3R Sales and Marketing. For previous articles like this, visit 3R's Articles. Alternatively, subscribe to Success our free monthly Information Bulletin with sales and marketing articles.Do you require a business growth specialist in Ireland with particular expertise on sales, marketing and business development? We help you get more sales leads, close more sales & increase your profit. Your Article Search Directory : Find in Articles
Recent articles in this category:
- Tips To Better Prepare Yourself For The House Buying Process
Everybody who has been through the process of buying a home will attest that it can turn into a very - Gain Qualified Prospects With The Cash Cow Sales Funnel
I've had the privilege to work with hundreds of sales and business people all working hard to make m - How To Write A Good Telemarketing Sales Script
By defining your specific selling process you will be able to apply a system that works over and ove - The Popularity Of Antique Cabinets Over The Years
Ever since collectors have been hoarding pieces of value and interest, antique cabinets have been ar - Guide In Selecting Clothes Hangers
One of the least respected areas in your home is your wardrobe. Most of the time it is stuffed with - Does Mattress Manufacturer In China Reliable?
The time we spend on bed is almost 1/3 of our whole life! So it's very important for everybody to se - What Makes A Good Salesperson
This fact is not hidden nor is this thesis cutting edge. There are a lot of personality and professi - Proper Preparation Prevents Poor Performance: Tips & Tools To Increase Productivity
Prior proper planning prevents poor performance. It may be a tongue twister, but it's important to r - Attractive Votive Candles
Impeccable range of candles and lanterns enhance home interiors. Simple yet elegant in design and fi - Sales Articles - Do You Want To Find Building Maintenance Supplies In Your Area?
Building maintenance supplies are among key factors to protect buildings against excessive depreciat
Most viewed articles in this category:
- Cold Calling - A Surprising Way To Gain Insider Information
If you knocked on all the doors in your neighborhood, you'd learn a lot about the people who live ar - How To Touch More Clients For Referrals
Interested in more referrals? Want to guarantee success in any referral marketing program? Here is a - How to Embrace and Thrive in Today's Buyer's Market
As fun as the last few years were to be in a piping hot real estate market, it's now time to accept - The Power of One
One is a very tiny number. However, it can have a tremendous impact on your revenues. Here are some - Sell Your Customer What They Need
When it comes to selling your products it is important to ask your potential customers probing quest - Profiting With Private Label Rights
There are three basic rights you should know about when it comes to resale rights marketing. T - The Lazy Way to Increase Your Sales Immediately... without spending a penny!
Let’s start at the beginning… First up, how do you define an affiliate program, or affi - Your Sales Self-Image
All sales success is the result of a foundation grounded in right attitudes and positive self-esteem - Sales And Marketing - Let Others Do The Work
There are many different ways in which businesses of today approach potential prospects and customer - The Financial Influencer
In my last article, I talked about the four influencers you have to deal with in a B2B sale. The fou