Earlier this month we posted our first blog expressing a newer way to think about our marketing in terms of 4 buckets: Paid, Owned, Earned and Shared media. Now, we want to bring you a useful tool that will help you get your Internet marketing on track this year. Instead of guessing, we’re going to walk you through the 5 steps you’ll need to take in order to do cost-effective lead generation with our Marketing Tools for 2014: Online Marketing Planner. When I ask people what kind of budget they have for Internet marketing, or any kind of marketing, sometimes I hear responses like “we don’t really have one, but if this Internet stuff works and we make more revenue than we’re spending on the marketing, then we have an unlimited budget”. While there is good intention here, the statement is usually derived from poor planning, and the mis-guided hopes that this “silver bullet” called Internet marketing is going to somehow magically produce this windfall of new sales.
The way it really works is that a plan will need to be developed, and some tough questions will need to be answered. Things like average sale per customer or product line, lifetime value of the customer, or even customer by product line, and profit margin per product. You’ll also need to know what kind of conversion rates you have from visit to qualified lead, and from qualified lead to sale. That’s what our 2014 Online Marketing Budget Planner is designed to do.
In this guide (based in Excel so it easily does all of the calculations for you), you will learn:
How to determine marketing goals and what makes an ideal customer
How to calculate your customer lifetime value
Understanding and determining your conversion rates
Understanding Cost Per Acquisition (CPA) and Cost Per Lead (CPL)
How to plan your budget for effective lead generation
The first step in planning your budget is to set some goals for the organization. If you’ve done Internet marketing before, talk about what worked, and what didn’t. What are your competitors doing online? What kind of market share do you think you could gain from this kind of marketing? Or, are you looking to expand your brand presence?
Next, you want to do some thinking about what makes an ideal customer for your business. Look at 5 of your best customers and begin to jot down the attributes that make them your best customers. Do an informal poll and ask them a little bit about what brought them to your company, and what helped them decide you were the best fit. Believe it or not, this kind of stuff is gold for your external marketing folks, like your SEO or PPC companies.
Next comes the hard part for many companies, which is determining their customer lifetime value. Our worksheet walks you through a B2B scenario, and the modeling was borrowed from this fantastic infographic on LTV provided by KISS Metrics, which is more of a consumer/retail model based off of Starbucks. The difficult part about this is getting to some of the variables such as average profit margin, discounted cashflow percentages, and really knowing how long a customer stays with you. For now, just make some educated guesses and you can refine later.
Next, we’ll walk you through how to calculate conversion rates from your website. In other words, we’re looking to measure how many web visitors became qualified leads. That means taking your inbound leads from all channels and applying a percentage to them because not every phone call or form submission is going to be your “ideal” customer.
Now that we’ve got your LTV and conversion rates figured out, let’s walk through what you would actually be willing to spend to acquire a new customer. If your customer spends $500 per month and on average stays with you for 5 years, how much would you spend to get $30,000 in revenue? If I said “give me $1,000 and I’ll give you $30,000 back”, would you do it? Well, depending on your costs, you’d probably say “heck yeah!” But before you do, let’s really dig in and find out what some reasonable thresholds might be. In the example built into your free online marketing budget planner, this customer is willing to spend about $445 to acquire a customer that will generate just under $15,000 in revenue.
Now, most of the hard work has been done. At this point you have:
- Made some actionable and measurable goals for your online marketing this year;
- Identified some attributes of what makes an “ideal customer”;
- Calculated your customer lifetime value;
- Determined what your lead conversion funnel looks like from visit to lead to qualified lead;
- Calculated your cost per acquisition (CPA) and cost per lead (CPL) thresholds;
You’re finally ready to start applying a budget and determining what an ideal marketing mix might be. In our workbook we give you 3 examples of online spend including pay-per-click (PPC), search engine optimization (SEO) and online banner ads (CPM-based). The purpose is to take all of your prior calculations and see where the CPL’s and CPA’s lie for each of the channels. This is a great way to determine if you should continue spending dollars in a certain area or not. You could add other channels such as social media, for example, if you paid for things like sponsored stories. You could also add affiliate traffic providers like Outbrain and others to see what kind of conversion rates you get from that traffic.
Hopefully this is a simple enough guide to get you going in the right direction, and should you need any help working through any of it, please call us at (888) 427-2178 and let us help!
Although there are other lower tier pay-per-click platforms, the phrase “PPC marketing” is usually used interchangeably with “Google AdWords marketing.” Google is the overwhelming leader because it has the largest audience of highly targeted visitors and has stood the test of time with the reliable AdWords platform.
While AdWords can be a very powerful marketing channel, it’s not a silver bullet. To decide if PPC marketing is right for your business, it’s important to understand the strengths as well as weaknesses:
Get Seen Immediately
SEO is a strategy that requires time. Reaching the first page of results for competitive keywords and phrases generally takes between six and twelve months, or even longer. If you plan on pursuing SEO but don’t want to wait a minimum of six months to start bringing new leads to your website, pay-per-click marketing is a great complement to SEO. With PPC, you can set up a campaign and start bringing in targeted traffic in less than 48 hours.
Control the Visitor Experience
With Google’s normal search results, you never know exactly what page on your website may show up as the first result for specific searches. This can make it difficult to optimize the path you want new visitors to follow. One of the great things about AdWords is you can choose the exact page you want to link to specific queries.
Visibility Doesn’t Mean Conversions
Many businesses get very excited when they set up their first AdWords campaign, only to become discouraged when they realize their ads aren’t generating any traffic. In order for a PPC campaign to drive results, every piece of the campaign has to work together. The campaign must target a set of keywords that people actually search for and that are a good match with your business. Then the ads have to be optimized to grab searchers’ attention and compel them to click.
Every Single Visit Costs
Even when you do manage to get searchers to click, you may still be frustrated if only a few of those visitors convert into leads or customers—and since every click costs, it doesn’t take long for a steady stream of visitors who don’t convert to get very expensive. That reality is why PPC success requires a combination of keyword management, compelling ads and optimized landing pages that persuade visitors to submit their contact information or make a purchase.
If you like that PPC marketing allows you to get seen immediately and control your visitors’ experience but are worried about not getting the ROI you want, call us at (888) 427-2178 to learn how we can use our expertise to optimize and manage your AdWords campaigns.