Do your numbers add up?

Do your numbers add up?

August 20th, 2009 by Ingrid Cliff

I have been working with a wonderful niche wholesale business over the past month. Their website is well optimised and they appear on page 1 of Google for all of their main keywords  at the end of the first month the site has been up.  To make it even better they have shown a strong profit from their first month of operating. Pretty impressive by any standards – even more so as this is a small business run from private home.

But what has impressed me most about this particular business is their willingness to work out their numbers – and in particular the cost to acquire each new customer.  They track each and every new customer to work out where they came from, and they have done this tracking seamlessly as part of their process rather than as an add-on or afterthought. For this reason they have some solid data to work with.

They then have a simple Excel spreadsheet that lists all of their marketing campaigns for the month in both print media and online adwords. From here it is simple maths – how much did it cost to acquire each new customer, and how much on average did customers acquired by each medium spend in their first month.

What they have found is customers acquired from online sources only cost them $1.03 each and they spend on average $50 in the first month (we are just starting to see this group moving into repeat orders – a whole new set of numbers for the spreadsheet).  Customers from the print ads cost my client $21 each and only spent on average $26 in the first month.

Think about it – if you could gamble $1.03 and consistently come up with $50 – would you gamble the money? What about gambling $21 and coming back with $26? Which gamble would you take more often?

The thing here is to realise that you can track your numbers – and use them to inform where you spend your marketing budget. If you advertise “to get your name out there” you are doing yourself and your business a disservice. Warm fuzzy name marketing is great for big business – but doesn’t pay the bills of small business where each dollar counts. You want tangible results from each campaign.

Yes, we only have one month’s data to go on, but we have statistically significant numbers given the traffic through the site (I knew those years of Behavioural Statistics back in my Psychology degree days would one day come in handy).

This is a small business – and yet they know with a fair degree of accuracy which marketing gets results for them. So before you run your next marketing campaign ask yourself – do the numbers add up? If you don’t know – find a way to track the results and determine whether the investment is worth it for future expenditure.

Until next time

Ingrid Cliff

We put your business into words

Heart Harmony – Freelance Copywriter

Twitter This

This entry was posted on Thursday, August 20th, 2009 at 11:42 am and is filed under Small Business Success. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or leave a response, or trackback from your own site.

Great article on the importance of tracking your numbers.