Sales: Measurable Results

Sales: Measurable Results

When advertisers consider what to offer in their promotion strategy, there’s almost always a conversation about the value of the type of person that responds to a special offer or giveaway.

Using the power of incentive (coupons, discounts, free gifts, or a chance to win) are all important tactics in a marketing strategy. It provides an introduction to a brand or product, leading to sampling, sales and long-term loyalty.

Giveaways and contests are easy and fast to implement, provide results in real time, are cost-effective and deliver measurable, accountable return on investment (ROI).

Sandra Fathi, President of Affect Strategies, says:

I have yet to find an organization — business-to-business or business-to-consumer — that would not benefit from some type of online contest.

One of Sandra’s clients, Cedarlane Natural Foods, increased brand awareness by raising Cedarlane’s visibility on their website and on Facebook. Matthew Gillespie, Director of Trade & Sales Planning, explains:

Our goal was for Facebook feedback to help generate leads and for Web visits to build awareness of the variety and advantages of the Cedarlane product.

They ran two types of promotions, a simple contest with a small prize, and a more complex contest with larger prizes. The result?

[We] more than doubled our email database, and, social media and Web traffic increased both in frequency and engagement by allowing customers to sign up to receive updates about future contests via their newsletter.

In other words, they increased awareness, introduced their brand directly to new contacts and identified new leads. Entrants participated for selfish reasons (to win a prize) and in the process, new customers came into the sales channel!

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Leads & Customer Acquisition

Leads & Customer Acquisition

Traditional marketing is hard for your advertiser to measure. They run ads in print, radio and TV and hope business increases as a result. They know they need an active mass-media presence, but how can they know it’s effective?

Especially in the digital frontier, the fundamental measure on the effectiveness of advertising is how many new customers you are attracting and how much those customers cost.

Here’s a tool you can use to help your clients. In the process, you become much more important as you help them sort through some important challenges:

  1. What percentage of sales volume comes from repeat or referral customers? These customers are driven to by past satisfaction. Don’t read any further until you’ve decided on a percentage. Give it your best estimate.
  2. What percentage of sales volume is triggered by location and its exterior signage? These customers come to you because of visibility. Again, write down a percentage, a best estimate.
  3. Add those two percentages together, then subtract from 100. This is the percentage of new customers who come because of advertising or external forces.
  4. Now, how many unique customers have been served in the past 12 months? Write down a specific number. They will probably need to consult records.
  5. Apply the percentage of ad-driven traffic to the total number of unique customers in the past 12 months. This will show how many new customers were served because of advertising. (If ad-driven traffic was 20 percent and Unique Customer Count was 5,000, then you had 1,000 ad-driven customers.)
  6. Divide that number into the annual advertising budget. This is the Cost of Customer Acquisition by advertising. It’s how much they actually spend on advertising to gain one new customer.Note; The formula doesn’t calculate the cost of referral customers because these customers don’t have a direct cost. They are an indirect cost of customer service and relationship management.

Warning: Their cost of new customer acquisition will likely be much higher than you expected. Don’t let this scare you!

Here are the obvious questions:

Q1: With the high cost of new customer acquisition, why advertise?

A: The primary goal of advertising is to acquire new customers. Repeat and referral business depends on it. Good customers move to other towns, or die, and you never see them again. Additionally, new people move into your market and have no idea you exist. Maintaining top of mind awareness is important.

Q2: If they can’t stop advertising, how can we at least reduce the Cost of Customer Acquisition?

A: What if the advertising message were adjusted to drive response to a specific offer or promotion? A specific call-to-action that results in reaching contacts on a personal level. Wouldn’t it be easier to convince a new contact to enter a free promotion than to come into their store? And, when they’ve learned more about them through their profile and embedded survey data, added insight can lead them through the engagement cycle.

Q3: If referrals are the most efficient way to grow, how can I increase sharing?

A: By marketing directly to respondents (email, text, etc.), your investment in promotions yields recurring value. By incentivizing each entrant to share the promotion with friends and social networks, advertising is leveraged far beyond direct responses. This “snowball” effect gains momentum and future promotions and offers have more impact with less reliance on traditional (expensive) advertising.

Lead generating promotions are one of the most cost-effective and efficient methods of marketing. Combined with creative messaging in existing advertising, marketing expenses become measurable and customer acquisition costs reduced.

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Online database sales lead calculator

Sales Lead Calculator

Many businesses struggle with how to measure the value of their advertising. This tool will help you show advertisers how to evaluate campaign effectiveness based on real dollars earned!

First, let’s define what is and isn’t a “lead.” Not every entrant is a lead. Some just enter to get a prize. We define them as “contacts.” They have value, as some may become interested prospects at some point, but they’re not as valuable as someone who is ready to buy now!

Some promotions generate more leads than others. For example, there will be more entrants interested in trying a new sandwich at a chain of delis than those interested in pursuing a career at a school specializing in nursing. But the value of a new student is far more valuable than someone who wants to buy a sandwich. So how can you figure out your campaign’s success?

The formula is: (TL x CR) X APP X PM / TL

Here’s what it means

Total Number of Qualified Leads generated (TL)

Multiply by Conversion Rate (a percentage) (CR)

This produces the total number of expected sales from this campaign.

Multiply by Average Purchase Price (APP)

This produces the gross revenue generated by the campaign. But now we need to figure out how much it’s worth:

Multiply by your company’s Profit Margin (PM)

Now you know the gross profit expected to be realized. Note: if you subtract your cost of the promotion from this number, you have your net profit for the promotion.

Divide by Total Number of Leads 
(TL).

Now you know the Lead Value (LV), how much each individual lead is worth.

How it works in the real world

A furniture company ran a four week sweepstakes to win a patio furniture set that attracted over 3,000 entries (contacts). Based on the embedded survey questions, the company found:

TL (Total Leads): 689 (homeowners interested in remodeling at least one room, and were interested in meeting with the company’s interior design team)

CR (Conversion Rate): 15% (689*.15=103 expected customers)

APP (Average Purchase Price): $10,000 (103*10,000=$1,033,500)

PM (Profit Margin): 46%

GP (Gross Profit): $475,410 ($1,033,500 * .46 = $475,410)

LV (Lead Value): GP / TL (475,410 / 689) = $690

After adjusting for leads that don’t pan out, they could afford to pay nearly $700 per lead based on immediate value, but there are other considerations.

Lifetime Value: What percentage of the leads become repeat customers? For some businesses (Dentists, for example) the majority of customers return again and again.

Referrals: If new customers refer others to your business, the lead is even more valuable, as one new customer brings in more.

Latent Value: Some leads will convert into customers later, and some contacts may become leads as their interests and situation changes.

If you want to get even more detailed, you can calculate contact value by simply dividing your expected profit by the total number of entries. In this example:

$476,410 / 3000 = $158.47 per entry!

Lead generation is one of the fastest growing areas of marketing and promotion, and once you understand how it works, it’s easy to see why.

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How to Increase Radio Sales

How to Increase Radio Sales

Notorious outlaw Willie Sutton was asked why he robbed banks. He said:

Simple. That’s where the money is.

The Radio Advertising Bureau reported that radio revenue has declined by 3% (download report here). And this was a year for economic recovery. The decline would have been greater, but:

Digital revenue increased by 18% and non-spot revenue by 7%.

18% is great, but it could be so much more. One of our clients has grown annual digital revenue by over 500% (to almost $2 million per year). Read more here.

WP Hatch to the rescue! To thrive, radio stations must grow revenue by harvesting sales from new sources. And we’ll show you how, with our creative, clear step-by-step training process. Here’s how:

  1. Establish Goals. You can’t manage what you don’t measure. We help you set realistic, achievable expectations.
  2. Training account executives. We de-mystify digital sales, offering easy-to-present, non-threatening packages.
  3. Demonstration. We’ll even come to town and help you sell it. This builds confidence in the concept!

With a focused, methodical process, you’ll generate sales in new business categories and deliver measurable, accountable results to advertisers.

Want some of that?

Go where the money is, and capitalize on the power of your loudspeaker with our innovative digital revenue solutions.

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How to Generate Leads with Promotions

How to Generate Leads with Promotions

Data has been described as the new gold. Generating qualified leads relies on accurate, actionable data, and gathering that information is about knowing what to ask, how to ask it, and making it worth their time to respond.

With our campaigns, you can learn virtually anything about entrants. Do you need to know how your brand is perceived against competitors? We can do that. Or, would you like to know why and how they use your product or service? Or maybe you just want to know when they’re ready to buy! The possibilities are endless.

We gather this information with survey questions designed to identify prospects (interested but not necessarily ready to buy right now) and hot leads (ready to make a buying decision). By embedding the questions inside the promotion, you get a new source of leads.

Does it work? Oh, yes! In a recent promotion, 97% of all entrants answered, at least, three questions, resulting in over 8,200 new leads interested in our client’s product.

Promotions are effective if they attract new contacts that become customers. We can help your team turn leads into sales!

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How to Lower the Cost Customer Acquisition

How to Lower the Cost Customer Acquisition

Traditional marketing is hard to measure. You run ads in print, radio, and TV and hope your business increases as a result. But how do you know it’s effective? The fundamental questions on the health of marketing are how many new customers you are attracting, and how much new customers cost.

Here are the important considerations:

  1. What percentage of your sales volume comes from repeat or referral customers? These customers are driven to you by past satisfaction. Don’t read any further, until you’ve decided on a percentage. Give it your best estimate.
  2. What percentage of your sales volume is triggered by your location and its exterior signage? These customers come to you because of your visibility. Again, write down a percentage, your best estimate.
  3. Add those two percentages together, then subtract from 100. This is the percentage of new customers who come to you because of your ads or external forces.
  4. How many unique customers have you served in the past 12 months? Write down a specific number. You’ll probably need to consult your records.
  5. Apply the % of ad-driven traffic to the total number of unique customers in the past 12 months. This will show you how many new customers were served in the past 12 months because of advertising. (If your ad-driven traffic was 20 percent and your Unique Customer Count was 5,000, then you had 1,000 ad-driven customers.)
  6. Divide that number into your annual advertising budget. This is the Cost of Customer Acquisition by advertising. It’s how much you spend on advertising to gain one new customer. The formula doesn’t calculate the cost of referral customers because these customers don’t have a direct cost. They are an indirect cost of customer service and relationship management.

Your cost of new customer acquisition will likely be much higher than you expected. Here are the obvious questions:

  • With the cost of new customer acquisition so high, why advertise? The primary goal of advertising is to acquire new customers. Your repeat and referral business depends on it. Good customers move to other towns, or die, and you never see them again. Additionally, new people move into your market and have no idea you exist. Maintaining top of mind awareness is important.
  •  I Can’t stop advertising, but how can we reduce the Cost of Customer Acquisition? What if your advertising messages were adjusted to drive response to a promotion? A specific call-to-action that resulted in reaching contacts on a personal level. Wouldn’t it be easier to convince a new contact to enter a free promotion than to come into your store? As you learn more about them through their profile and embedded survey data, you gain insight to lead them through the engagement cycle.
  • If referrals are the most efficient way to grow, how can I increase sharing? By marketing directly to respondents (email, text, etc.), your investment in promotions yields recurring value. Since each entrant is incentivized to share the promotion with friends and social networks, your advertising is leveraged far beyond direct responses. This “snowball” effect gains momentum and future promotions and offers have more impact with less reliance on traditional (expensive) advertising.

Lead generating promotions are one of the most cost-effective and efficient methods of marketing. Combined with creative messaging in existing advertising, your marketing expenses become measurable and customer acquisition costs will be reduced.

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