To manage your agency, for it to survive — even thrive in these difficult economic times — you are going to have to learn to market effectively. And the evaluation of what is effective is based on facts and figures. Here are a few important questions to consider:
- How much does it cost you to attract quality clients?
- What is the lifetime value of each type client?
- What is your return on investment for each marketing program you implement?
These are pivotal questions and you should know the answers. For example, have you considered the crucial relationship between a client’s lifetime value and the money you spend to attract him? How’s that? Well, let’s say you sell auto insurance, your average client stays with your agency five years and the commission earned is $1,200. How much would it be worth to attract an additional $1,200 of income to your agency? Now that is a fact-based analysis that will help you run your marketing campaigns like a pro.
What should you spend on a cross-sell campaign, such as a client newsletter, to get a second or third policy in the same household and increase client longevity? How much should you allot for a referral program to get clients and others to refer their friends and family? Those questions cannot be answered without knowing key statistics.
What is making your phone ring?
Every prospect, not just new clients, should be asked: How did you hear about us? But don’t stop there. Your evaluation should go beyond knowing how many prospects came from each source, and include: How many of those bought and what was the dollar value of the sale? Why? Not all prospects are of equal value and you make money when a prospect buys, not when the phone rings.
To make a sound financial decision, you must calculate the return on investment of each individual marketing campaign. For example, say you bought a modest display ad in a small local paper for $500. It generated seven inbound calls and one became a client. Should you continue the ad? That depends if it produced a profit for your business. To know if it did, you have to track the dollar value of the initial sale and also know your lifetime value of a client.
That sounds so elementary but I seldom find agents who carefully track lead sources, conversion-to-client rates, value of initial sale, lifetime value, referrals from the client and dollar value of referrals. It may seem tedious to track all those factors but these are the fundamentals of a return-on-investment analysis.
This type of detailed analysis runs counter to the lessons taught in college business courses, which advise you to set your advertising budget as a percentage of gross income. Well, if you knew that an ad would return 3x in new commissions and 17x in lifetime value, wouldn’t it be a good investment? The bottom line is, you have to know before you can go, hence tracking key figures about your client-acquisition funnel.
By the way, a client newsletter is the best, automated method for following up with nonbuyers to turn them into clients down the road. MoreClientsEasier.com has information on doing this.
Diversity leads to stability
So, back to the question: What is the worst number in marketing?
Why one? Because you will be sunk if you have only one reliable source of new prospects and it goes away. That’s what happened to the thousands of business owners who relied on broadcast fax for lead generation. Most had not developed other sources of prospects before broadcast faxes were outlawed. Any business which did not have or quickly develop an alternate source to fill their prospect funnel went out of business. And that is the danger of one in marketing.
Optimizing your website is a good idea but when the Google algorithm changes, will your vital online traffic drop? Email marketing is all the rage, except open rates are infinitesimally small and getting worse by the day. There is even the real possibility of a Do Not Email List. Use email in your marketing, but it should be one of many media choices utilized to get out your message. The bottom line is you must have multiple streams of new leads or you are far too vulnerable.
Advertising choices to promote your practice:
|Online squeeze page
Yellow page ad
Magnetic car sign
Online yellow page ad
Client appreciation event
Booth at community event
Chamber of commerce
Your own website
Professional referral partners
|Write an educational book or booklet
Host a contest
Leadership in community groups
Promotional items (t-shirts, mugs)
Cross-sell current clients
Sponsor a target-niche event or booth
Pay-per-click Google ads
Which media sources do I recommend? It depends on the demographic you hope to reach and a bunch of other factors I do not know about your specific circumstances. I can tell you that every agency should engage in direct mail. It is the only delivery medium that has worked for one hundred years and is still working very well today.
No matter how you advertise, you must adhere to the “Golden Triangle of Marketing” principle:
Your advertising will be successful to the degree you match the message (what is offered) to the market (to whom it is offered) and media (where it is offered).
If your results are lack luster, I guarantee one or more of those three factors are off. Fix that and you’ll improve your response rate.
The best book ever written on managing your agency effectively using objective facts is “No B.S. Ruthless Management of People & Profits” by Dan S. Kennedy. This book should be required reading by every entrepreneur and the basis of every college’s Business 101 course. I cannot recommend it highly enough.
Oh, and don’t forget to expand your marketing channels. You’ll sleep better at night.