I remember as a child putting a lima bean in a wet towel and waiting to see what would happen as part of a science project.
Bet you had to do the same thing as a young student?
The first few days...nothing...
but then you would see the lima bean split...then a little green shoot would come out...exciting stuff!
Then we transplanted the little bean into a larger environment of a Styrofoam cup of dirt and watered, watched...and waited.
Eventually a stem would grow out of it and when it fully matured...a pod.
Imagine splitting that pod open and only finding ONE LIMA BEAN inside!!! No one plants a seed to only get one seed back...what a waste of time and energy!
You should be no different with your Lima Bean of marketing. You should be getting a true Return on Investment (ROI) not just Breaking Even...
Let's get more technical on our results from yesterday;
| Activity | Metrics | Terminology | Analysis |
Cost of Direct Mail
|
$400
|
Acquisition Costs
|
All costs related to getting a sale
|
| # of pieces |
1,000
| Reach | # of pieces and demographics of target audience |
Response Rate
|
1%
| Response Rate (RR) | |
Number of leads
|
10
|
Leads
|
Cost per lead
400/10 =
$40 CPL
|
| Appointment Rate |
60%
|
Lead to Appt
Conversion Rate
| |
# of Appointments
|
6
| Opportunities |
Cost per Opportunity
400/6 =
$66.67 CPO
|
Closing Rate
|
30%
|
Conversion Rate
| |
# of Sales
|
2
| Closed Won |
Cost Per Sale
400/2 =
$200 CPS
|
| Gross Revenue | $800 |
Gross Revenue before costs and expenses deducted
|
# of Sales x Commission
2 sales x $400 =
$800 GR
|
Operating Revenue | $400 |
Revenue generated - Cost of Acquisition
|
$800 - $400 =
$400 OP
|
| Return On Investment | $400 or 100% | Return On Investment |
ROI =
Acquisition Cost/Operating Revenue
$400/$400
100% ROI
|
Ok, some of you have zoned out...some of you need an aspirin!
Some of you need to stop scrambling to produce sales and start Running A Business!!!
This is what business owners and CEO's do...They run a business!
No, I am not angry...just emphatic!
While the terms used above may differ depending on the source you cite, these are all the metrics that are required to understand the efficiency and effectiveness of your precious marketing dollars and also Your Effectiveness at managing, monitoring and closing them!
Oh yes...back to the Lima Bean.
When you shuck that pod you expect to see at least two lima beans in it or you would consider it "defective"...right?
After you do all the things necessary to create a "one for the money" proposition...
What is the single greatest thing you can do to increase your Return On Investment in the scenario above?...
GET TWO FOR THE SHOW!...
Until tomorrow, I wish you Money, Power, Success!
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