So many business people focus their whole life on cost reduction. Working long hours just to save a wage, cutting costs just to make ends meet.
Now keeping costs down is still one of the most important areas of business but, if you really want to grow your business you’ve got to put more of your time into income generation than you do cost cutting. Remember, if you were to cut your costs by as much as you possibly could and still leave your company running, you’d probably only add about 10 or 20% to your bottom line. Yet through building your income, the bottom line is limitless.
So how do you build that business…start with testing and measuring everything, this is the KEY!!! You cannot manage what you do not measure. And how do you grow if you don’t know the areas to work on? When it comes to your business you must find out what’s working and what’s not. Why spend $250 on an ad if you’d be lucky to get $150 worth of business out of it? On the other hand if an ad is returning handsomely, it makes sense to enhance it even further to produce a greater return. One of the big problems with marketing is that many people think their ad is bringing in more business than it really is because they don’t properly test and measure. How do you do that? You’ll want to ask each and every customer and prospect where they heard about you and your business. This will give you an idea of what’s been working and what hasn’t.
When you are assessing your marketing return make sure that you consider lifetime value too. Think about this for a moment, how much are you going to spend in your lifetime on something as simple as toilet paper? Thousands of dollars? How much will the average customer in your business spend with you over a lifetime? Return on marketing should pay due consideration to this fact. Normally you can consider lifetime value to be at least two-and-a-half times the customer’s initial spend.
You must establish this long term view of their value before you can appreciate how important it is to develop a relationship with customers and ensure everything is done to keep them as long as possible.
And remember that any business is basically split into two main areas, Marketing & Sales and Delivery & Distribution, and that each is equally important. That means you should be putting 50% of your time, effort and investment into distribution, that is, getting your products and services to the market place and the other half of your time should be spent on sales and marketing – getting the market place to come to your products and services.
Have a great week,