How You Should Be Advertising Your Business
Introduction
Hey there, my name is Evan Knox and I’m the founder of Caffeine Marketing. Most business owners struggle to market and grow their companies at scale. Oftentimes they try a bunch of different marketing activities only to have mixed results and are left wondering if marketing will work for them. Day in and day out at Caffeine Marketing I help small business owners make marketing profitable. I’m excited to share with you some of the secrets to make marketing simple and a profitable endeavor.
Figure Out your Margin
All too often business leaders don’t take the time to understand what a customer is worth to the company's bottom line. In order to market effectively, you need to understand how much wiggle room you can spare to acquire a new customer.
In an ideal scenario, you can calculate this amount by understanding your fixed and variable cost of goods sold per customer on average. That math can sometimes be daunting and becomes harder to understand the more complex the business is.
If you’re struggling to figure out how much profit you have per customer over the course of a year I would simply divide your yearly profit by the number of customers you’ve had over that time period. This will give you a rough estimation of how much a new customer or client is worth to you. From there you have a starting point to determine if your marketing activity is profitable.
Look into Revenue Per Click (Average Order Value x Conversion Rate)
Another great way to forecast if your marketing might be profitable is by determining your revenue per click aka RPC. Hopefully, this number does not sound too intimidating because it’s simply an indicator of how much revenue a click onto your website is worth to your company.
There are two ways to calculate this number. First, taking the total revenue over the trailing twelve months and dividing that number by the number of clicks on your website. The second and preferred method if that data is available, is to look at your average sale and multiply that by your conversion rate. This number is generally a more accurate representation of website traffic to sales correlation.
After determining this number you can compare it to your marketing campaign and look at your average cost per click going to your website and comparing it to your revenue per click. If your revenue per click is at least two times higher than your average cost per click, you’re headed in the right direction.
Understand the Three Phases of Marketing
There are thousands of different ways to understand a marketing funnel but I prefer a very simple one to explain marketing. The top of the funnel is brand awareness, the second is consideration, and the third is conversion.
The top of the marketing funnel is all about making people aware that you exist. If they don’t know that your product and services exist, they will never buy from you. Making people aware is the first problem to solve.
The second problem to solve is reinforcing your messaging, chiefly the problem that you solve. Various studies show that humans need to be exposed to marketing messaging over seven times before they really understand what the offer and product/service are. In this stage, you’re looking for affordable and engaging means of connecting with your potential customers to help them better consider buying from you.
Finally, in the conversion stage of the marketing funnel, you need to make it as easy as possible for people to buy your products or services. If the process is cumbersome and unclear you’re leaving a heartbreaking amount of money on the table.
Is Your Message Clear?
If people can not clearly understand what problem your product solves and how to buy it, they won’t. If your messaging is cute and clever you can forget about converting traffic into sales. You must be to the point that it might feel too simple to you. As a StoryBrand Guide, we use the SB7 framework in all of our client’s marketing. Annie at Decoded Strategies is also a StoryBrand guide and would be a great choice to get help marketing if you feel like your messaging is unclear.
How Much Can You Afford?
Please do not throw a hail mary with your marketing budget. Your budget number should be aggressive and hopeful but not put your business in a position where you have to hit a home run on the first pass.
The process of marketing your company can be profitable very quickly, sometimes even the day that you start. Other times it may take a few months to really iron out your offer and marketing mix.
What Mediums of Advertising Should You Use?
Facebook and Google Ads are a fantastic starting place for marketing. If people are often on the hunt via a Google search for your product or service, I would lean towards this option. Other times people have a problem and are not aware they need a solution to and Facebook ads are one of my favorite platforms to use.
The two platforms are used by countless SMBs to scale and grow profitably very quickly. Through my partnership group, Tactos, we own and operate a dozen different brands right now. The primary way that we scale up revenue is through these two platforms.
When done well and included in a bigger overall marketing strategy, Facebook and Google ads can be the secret sauce to growing your business.
What Marketing Mediums Should You Avoid?
People tend to stick with advertising mediums that they understand and are comfortable with. Oftentimes they will stick to a medium like mailers, newspapers, billboards, and magazine ads because they have either “always done them” or like the comfort of seeing a physical object.
I never suggest these platforms for the first two or three mediums for a small business to advertise because the return on investment is so hard to measure and they are filled with contracts and high price tags for the number of people who see your ad.
They do have their place in a bigger overall strategy but in my opinion, are a waste of time and money for most small companies.
What Are Your Goals?
“Getting our name out there” is a sorry excuse for a goal and a plan to grow your business. The phrase is a virus of thinking for small business owners and it doesn’t actually help them. What you really want to do is understand your holes in your marketing funnel first and then address them. If your primary problem to solve is brand awareness, you should not try to “get your name out there” but instead should invite your customers into a story. A story that helps them overcome a problem they have and win the day at work or at home.
Unless you are a nonprofit, I think your goal should be to grow your revenue profitability. If you noticed I didn’t say profit first because it’s really about sustainable scaling your customer acquisition in such a way where it grows the business in both the long and short term. If you’re acquiring new customers profitably, they will most likely buy from you again or refer someone to you further growing your bottom line. Some of that is the by-product of a great business and not necessarily marketing.
How to Figure Out If You’re Winning
Oftentimes marketing agencies will show their clients spreadsheets of data trying to tell a particular story. If your agency or marketing team is only talking about clicks and not revenue or profitability, I think you have the wrong partner.
Your marketing should grow your revenue and your reports should show that.
If you’re only looking at metrics like click-through rates and cost per click, you’re swimming in the ocean in the dark, not fun. Drill down into the data to determine how much money the business is bringing in from marketing.
What Other Things Are Needed to Make Marketing Successful
The middle and lower parts of a marketing funnel are often referred to as a sales funnel. This is confusing I know. In marketing, a sales funnel starts with a free guide on your website (or a discount code) given in exchange for someone’s contact information.
Once you’ve got their information you send them a series of automated emails over a couple of weeks or days that onboards them into becoming a customer. This enables you to convert more of the people who become aware that you exist or visit your website. This significantly increases your revenue per click value. This means marketing is more likely to become profitable when you have systems in place to support it.
Where Should I get started?
You should continue to educate yourself or find a partner that you can trust. I suggest you contact Decoded Strategies to get started with your marketing.
Written by,
StoryBrand Certified Guide
Founder of Caffeine Marketing
Making Tech Sound Simple
We help tech-focused companies implement the StoryBrand framework in simple, powerful marketing and retention.
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