Two of the most memorable quotes from the greatest management thinker of all time, Peter Drucker, are must-haves for today’s business owners.
If you can't measure it, you can't improve it.
Management is doing things right; leadership is doing the right things.
- Peter Drucker
These quotes come to mind when we dig deeply about understanding our sales and tracking.
Ask the following questions:
- How much do I spend on advertising? Do you know the exact amount of what you are spending in marketing and promotions (e.g. Facebook ads)?
- How many leads do my promotional efforts provide? Are you determining how many prospects you get from these promotional efforts?
- What is the conversion rate? Do you know the percentage of prospects that turn into paying customers?
- How much do my customers spend on my business? Do you have a comprehensive idea of the average amount each customer spends on your products?
Every business is different. Some say if you are a less than 5 million per year biz you should spend 7-8% of your gross revenue, sometimes even 20% in highly competitive areas. Most chief marketing officers (CMOs) spend 4% of their Gross Revenue. At the end of the day, your profits will determine how much you spend.
If you have your numbers together, you are aware of your Customer Acquisition cost, your conversion rates as well as your customers’ Life Time Value, this will allow you make the best decision and scale your efforts to maximize your profits. One of the strongest suggestions is to implement Facebook pixels on your website if you haven’t. This will allow your Facebook to associate anyone that visits your website into a custom audience you can advertise on Facebook later on.
Number of Leads and Lead Quality
Google Analytics is a great tool for tracking leads. And going through your Facebook Insights data will help you also. But these are for things done online. For your local presence, your point-of-sale (POS) system will help you with this. It could be as simple as a camera feed, reviewed daily or weekly and seeing how many people come through the door and then comparing it to your actual sales. This will give you a simple tracking method that you can look back through and track the success of your sales and marketing efforts.
A conversion rate is simply the average number of people that take us up on our offer. It is sometimes called closing rate. Most people think of this in terms of sales conversions, but in marketing, we need to apply a conversion rate to our marketing or customer acquisition also. What is the conversion rate in our emails, our blogs, engagement in social media? All these conversion rates will add up and take people deeper into our sales funnel and result in an actual sale.
Average Customer Spend
Lock in on what value we bring to our customer and share more of that. Knowing our customers very well will allow us to position products to them that we know they will buy. Using an effective outreach campaign through email, social media and also our sales process needs to encourage and suggest potential upsells. Working with your sales team and incentivizing the sale will help this out.
Each business needs a developed, creative and effective sales funnel so they can tailor the experience of their customers to hone in on attracting them, then increase their order frequency and ultimately their spend.