Have you ever placed an advert or bought marketing support which has given you very few leads – but you felt you should carry on with it anyway? After all – you have to do something, right?
When I talk with clients about marketing, they often think I am talking about getting more enquiries into the business. Yes – but not at any cost. There are lots of things that most businesses can do to improve profit, and gaining more leads may not be top of the list.
If you think about it, getting a new lead is just the start of the journey towards a profitable relationship. The new lead needs to be converted into a sale and the value of that sale should be maximised over time. Thinking about conversion rates, if you get 50 leads and 10% of them become paying customers, that’s the same as getting 25 leads and turning 20% of them into customers. So, the question is – should we focus on lead generation or on improving your sales process?
Before embarking on lead generation strategies, I will ask people to measure lead generation and lead conversion. We look for the number and source of leads, the cost per lead, the conversion rate and the cost per new customer. We can then look at the scope for improvement. Often, especially if the conversion rate is low, it is easier, faster and cheaper to work on the sales process. Doubling your conversion rate is just as good for the bottom line as doubling the number of leads.
The good news is that conversion rate is not the only thing you can work on to improve your profits.
ActionCOACH founder, Brad Sugars, sums this up clearly in his ‘5-ways’ formula, showing that making small changes in one or more areas can have a big impact on the bottom line.
So, what‘s your focus in the next quarter to increase your profits?
If you would like some help with marketing for profit, contact me or give me a call on 01672 512001
