Many companies determine next years’ advertising strategy based on current sales coupled with gut instinct. But to make the most of your budget, it pays to study your numbers in depth.
Here are a few of the most critical marketing numbers to review:
Cost Per Sale
A simple number to calculate – your total media costs divided by your total sales. Why is it important?
Naturally, if your cost per sale exceeds your income per sale, a change is in order.
Beyond that, look at the cost per sale for each medium you’ve used, every offer, every creative version. Compare every variable and see what’s most efficient.
Isolate the elements with the lowest cost per sale. Look for patterns, such as media with a geographical skew or ads that sell product rather than generate leads.
Another easy calculation – total sales divided by total customers.
The most important asset of any company is their customer base. To grow your business, consider how you can increase your average sale. A few possibilities:
- Include additional product offers and an order form in every product shipment.
- Create a restricted-access web page offering discounts just for customers.
- Send periodic e-mailings or postcards to your customers.
- Give a bonus for orders over a certain size.
- Have phone operators offer related “upsells.”
- Offer collections of plants, or discounts on products that complement each other.
Companies that rely on a two-step sales process – generating leads, then converting them to sales — need to examine their conversion rates closely.
Many companies assume that conversion rates (the percentage of leads that become buyers) will remain constant regardless of source. Not true! Some media, some offers, and some creative convert much better than others.
If you get lots of leads but few sales, look for the missing link. It could be a weak website or confusing sales literature.
The very best way to find out why more prospects don’t buy is to ask them! Most people love to be asked for their opinion. Call them up, invite their honest feedback, and offer a little something for their time.
For more keys to improving your profits, review your best-selling products. How can you make more out of your best sellers? Move them to the front of your catalog and give them more space. Introduce them on the home page of your website. Plan a campaign featuring your best selling product. If supplies are limited, consider raising the price.
Demographic Data Mining
Look for patterns in your best-performing media. Is it skewed towards one area of the country? Concentrated in urban, suburban, small town or rural areas? More male or more female? What’s the median household income?
Most advertising media can provide you with a wealth of demographic and geographic information. Finding the common threads among your strongest media tells you where to look to generate more customers profitably.