Marketing by numbers, seriously?

By Nial Adams


It’s a numbers game but not as we know it!

For over twenty years now I’ve watched thousands of businesses waste massive amounts of hard–earned cash on marketing that’s just like shooting bullets in the dark.

This traditional approach, which has become known as ‘spray and pray’, is actually the way that the vast majority of businesses spend their time trying desperately to get their message to market. With little more than hope and a prevailing wind.

It’s expensive, as it creates a high degree of waste, something every business should aim to reduce. It’s also time consuming and even worse than both of these facts, it’s completely chaotic and unscientific, which means that even if it does work occasionally the chances are you’ll never know why and therefore be unlikely to repeat it.

marketing by numbersDoesn’t really sound like much of a strategy for marketing, does it?!

I’ve heard experienced business owners tell me “but Nial, it’s a numbers game” and the sad reality is that for most that’s all it will ever be.

If you’re willing to keep firing those bullets you might just hit something but the chances are that you’ll just keep on wasting your resources, rather than spend money and time looking for a marketing mix that actually works – consistently – for you.

This approach to marketing is actually the way most businesses work, even the bigger ones. I guess if you’ve got budget to burn then it may not be a concern but seriously, if there is a better way to spend your profits, why wouldn’t you?

The fact is that the secret to good marketing does in fact rest in the numbers; the numbers tell you what to do and how you’re getting on.  They don’t lie and they have no emotional agenda designed to pull you off course. They’re not there to sell you anything.

Remember, marketing decisions shouldn’t be based on your gut feeling, they need to be based in fact and evidence.

If you’re serious about sorting out your marketing and giving yourself a plan to work towards progressively, the first thing you need to know are your numbers. It may not be a case of marketing by numbers but without them you’ll simply never progress or get the results you could achieve.

Here’s a short exercise that I encourage every business to follow:

1. Know your Profit Margins; it’s shocking but true that a majority of business owners and managers don’t actually know what their profit margins are. You may have a range of products and your costs may flex with the needs of supply and your delivery mechanism but you should still know your margins.

Every business should be able to extract a figure, on any given day, of how much profit each product and service will deliver.

2. Know your Average Lifetime Customer Value; every customer relationship you create has a value, on both sides. You might have repeat customers who buy a little from you every week, or alternatively you may only sell once to the same person.

No matter what you do or sell, you should be able to calculate what a customer is actually worth to you over the lifetime of that vendor-consumer relationship.

3. Know your Cost of Acquisition; this is how much you’re actually willing to spend on attracting/buying each customer.

You can only work this out if you know the two mentioned figures above.  Some businesses I take through this exercise are shocked to find that they are buying customers (through their sales and marketing activity) at a loss.

Remember to calculate all fixed and variable costs and don’t just look at Cost Per Lead; you still need to know what your conversion rate is.

Just looking at these three simple metrics will give you a solid base on which to build your marketing plan. When you know your figures you’ll be able to make some informed decisions and feel much more confident about trusting your marketing, knowing that you’ll create a positive profit margin from every new relationship you win.

And please, don’t trust people who give you figures that end in a ‘0’ or a ‘5’, they’re just guessing!  Do the work and the numbers will help you make your marketing work.

So why do so many business owners and managers fail to do the maths?

Well, the main reason seems to be that they simply don’t know how important this is. As you’ll often hear, you don’t know what you don’t know.

Marketing tends to be a bit of a hit and miss approach for most people but it really doesn’t need to be that way. The three examples I’ve given you above really are critical. And if you are genuinely serious about getting to grips with your marketing then this would be a good place to start.

Flying Start Marketing ChallengeIt could well take you a few hours to work these out, it may even take you a day or more to get all the information together that you need to calculate these but please, trust me, it really will be worth it in the long run. You’ll see evidence of this for sure.

And finally remember this; by not addressing these factors you’re actually losing out twice. Firstly, you’re almost certainly wasting money somewhere in your marketing. Money that you’ve worked hard to produce in the first place. So spend it wisely.

Secondly, you’re also probably losing out on more sales; profit that should be coming into your business. And even worse that this… that profit is probably ending up in the till or bank account of your competitors.

If you’re happy with that idea (and generous with your money) then maybe ‘spray and pray’ is right for you. If not… well grab your diary and start working on your numbers.


PS. If you want to learn more about marketing take the Free Trial of Make Marketing Work – my new marketing course online.


Nial Adams Author of Make Marketing Work

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  • Stan Hornagold says:

    Thanks, Nial for a succinct post. It is great that you are encouraging people to turn their (commendable) effort and energy into something that really is more focussed and delivers financial results. If they follow your advice here, they will unlock a lot or value in their organisation. Stan

  • Tremendous Training says:

    I once worked at a major bank and the amount of money that was spent without proper research or by using small sample group results was unreal. I say spend what you want if you have it and can justify it.

  • […] Learn why these numbers are important; you simply can’t expect your marketing to work fully until you do. […]

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