My dad used to say: “I wish I had a nickel for every time I heard (insert here everything my day heard more than once).” Afterwards, I would think something along the lines of “Yes, Dad, then you would have like 10 cents.”
Well, call me my dad but I wish I had a nickel for every time I hear someone ask if a particular marketing strategy worked.
“Hey Allan, do adwords work?”
“Hey guys, does social media work?”
“I know this has been asked before, but does ‘ABC lead generation’ website work?”
I also get this question a lot:
“Hey Allan, is ‘ABC agency’ worth the money?”
Well folks, if adwords, social media, the lead generation websites and the marketing agencies didn’t work, they would not be in business.
So, the question is not “do they work,” the question is “what is the best marketing strategy for my business?”
Well, today is your lucky day because I am going to help you answer that.
In order to determine the best marketing strategy for your business, you must track key metrics, listen to your data, and fire bullets first, cannonballs later.
Track these Key Metrics
- Cost per QUALIFIED Lead (“CPL”)
This is how much it costs you to get a call from, or the contact information of, someone who could potentially become a customer. It may go without saying but this ratio is total ad spend (on a particular marketing strategy) divided by the total number of qualified leads.
Don’t forget to qualify your leads by making sure the individual is within your service area and is experiencing a problem that you have the capability (and license) to solve. If a kid clicks on one of your ads and calls you to ask questions about german roaches for his science paper, that is not a qualified lead. Don’t take it out on Skippy, take it out on whoever is in charge of your marketing.
- Percentage of Revenue (“POR”)
This ratio tells you what percentage of your overall revenue is spent on marketing. When you are testing out specific strategies (see firing bullets below) you will want to make sure to separate them and track them individually so you can compare. If $3,000 spent on adwords brought in $50,000 of revenue, and $6,000 spent on ABC lead generation website brought in $45,000 of revenue, I would suggest sending a few more dollars Google’s way. People, this isn’t rocket science.
- Total Leads (or Total Revenue)
This is the only “non-ratio” metric that I am including. It is very common and advisable to have growth goals and revenue goals. They are very easy to understand, digest, and remember. Leads are the tool that make your growth goals attainable. Tracking total leads matters. If you are wanting to add 2000 next summer, and you are averaging 2 leads a month from a particular strategy, dump the strategy. Regardless of the ROI, your time spent managing that platform more than outweighs the ROI boost you get from using it.
- Cost per Customer Acquisition (“CPCA”)
This is where sales and marketing get to tango. It is essentially the intersection of CPL and your close rate. And CPCA is not all dependent on the close rate like some believe.
If you have your data, and it is reliable, it is not uncommon to notice that specific salespeople have different close rates from different lead sources. So, if you notice that your CPCA is higher with some strategies than others, especially when you account for and control all factors (such as making sure the data is coming from the same salesperson), the lead source that produces the higher CPCA is likely sending better leads your way. Not all leads are created equally. This is true even when cancelling out unqualified leads (like the call from Skippy).
Listen to Your Data, Not Public Opinion
Your location, your niche, and your company goals are more important indicators of what marketing strategy you should follow than is the advice from some random guy on Facebook who probably spends more time acting like he understands marketing than he actually spends implementing marketing principles in his own business.
Your data means everything. Notice, I did not say “others’ data”. I have branches in several different states. My branches have different demographics, climates, and customers. I analyze the data from my branches separately. If I do that within my own company, you certainly shouldn’t rely on data from a PCO in another state, with a completely different business model and distinct goals. That’s like asking your grandmother to help you recover your Tik Tok password- it just doesn’t make any sense.
Fire Bullets, Then Cannonballs
In his landmark book Great by Choice, Jim Collins introduced the concept of firing bullets first then cannonballs. According to Collins,
First, you fire bullets (low-cost, low-risk, low-distraction experiments) to figure out what will work—calibrating your line of sight by taking small shots. Then, once you have empirical validation, you fire a cannonball (concentrating resources into a big bet) on the calibrated line of sight. Calibrated cannonballs correlate with outsized results; uncalibrated cannonballs correlate with disaster. The ability to turn small proven ideas (bullets) into huge hits (cannonballs) counts more than the sheer amount of pure innovation.
This principle applies perfectly to marketing. Sample a couple of different marketing techniques, derive accurate and reliable data, then use that thing between your ears to determine where to start launching the proverbial cannonballs in your marketing plan. Finally, let ‘em rip.
So there it is. Track key metrics. Listen to your data. Fire bullets first, cannonballs later.
And please, no more questions about Homeadvisor.