The most frequent requests that we get is a request for a quote, and that seems reasonable for a business owner or manager to say can you give us a quote.
However, I think this approach or way of asking for a price could be putting you in a box and perhaps putting your business in a little bit of trouble. A better way to look at it would be to look from the inside as a business and ask,
how much are you willing to pay per sale or an outcome that matters?
Now, this doesn’t obviously apply to every business, for example, if you’re running in a restaurant you can’t say how much is it costing us to sell a plate of a food or one burger, that becomes very-very almost impossible to measure.
This won’t necessarily work for every single business
If you have an online store, on the other hand, it becomes very-very easy to measure how much it costs you per sale, because people are transacting online and you can track all the way from how people find out about your product to when they made a purchase, and then there’s somewhere the middle where business depends on leads coming in and then those needs becoming customers in the long run.
So, let’s explore all three scenarios and see how you can ask this question better in order to get the most out of your relationship with your marketing agency.
So, instead of saying can you give us a quote, you look inside, with the exception of restaurants of course, because if I run a restaurant, my target market is likely to be 5 to 10-kilometres around the restaurant and I want as many people to see my brand, as many people as possible to engage with my brand online.
So, we measure success slightly differently in that scenario, however, if I’m running a business that depends on either leads coming in or making online transactions, here it gets a little bit more interesting. An example is you have 5,000 rent to spend on advertising online marketing in general.
Working out the cost of sale
Now the nice way to approach this would be to say hey!
If I spend R5,000, how much in sales do I want to get back?
And when you break that down further, you can say how much are you willing to pay per sale. So, if you have spent R5000 and you got in a hundred leads and then ten of those leads became customers, it means that it cost you R50 per lead for the hundred leads and then it cost you R500 per customer.
The question becomes, are you willing to pay R500 per customer? If you are then the conversation is very-very simple, instead of the marketing company setting the mandate for you, you are, because now, you’re approaching your marketing company and saying to them, hey I am willing to pay R500 per customer can you make that happen for me? because any business owner-manager in their right mind would not mind if they say; if R500 per customer is a profitable thing for you, then you just keep paying more, as long as what you’re paying out is less than what you’re getting in in terms of value and profits.
So, you see there already, the conversation becomes very-very different, the interaction with your marketing agency becomes very-very different because the path to a success or what we measure success is now suddenly very-very clear, you have given the marketing company a mandate.
Now, it’s not always easy to for the marketing company to say that we can get you a customer for X amount because that might not be a number that you’re willing to work with, so in most cases what happens is people request a quote and they get given a quote and the quote goes something like this, for R5000 we will post four times on Facebook, two times on Instagram, we will spend two R2000 on Google Ads.
None of that tells you where your business stands, none of that shows a clear path to profitability, no matter what the circumstances are, with the exception of course of the first category which is your restaurant entertainment type of scenario, which even then you can put measures in place to try and get as accurate as possible but when your business depends on leads, when your business depends on online sales, you have an online shop, the path is very-very clear and you as a business owner, for example, you spend five thousand and you sell 50,000, that means your cost of sale is ten percent, are you okay with that?
In a nutshell
So, my suggestion is to look inside and say this is what we are selling, how much are we willing to pay to sell each one of these items? Then go to your marketing company and say can you sell this item for me? Can you sell this widget for me for this amount of money? And then let them go run some tests if they are good at what they do they will run some tests and come back to you and tell you whether it’s possible to sell it for that much or not.
In many-many cases we have had to stop campaigns because they just weren’t profitable and you need to find out from the business side of things, what works, what doesn’t, keep doubling down on what’s working and stop what’s not working.
So, that’s my advice for the day, thank you very much for taking the time to watch this video if you have any questions please leave them below or above wherever you’re watching this from. I hope to see you next time.