Your Marketing Audit Deals With That Most Critical Element Of Your Business.
Performing a marketing audit will allow you to determine and document the existing formal systems and processes used to generate revenue. It should also highlight areas of weakness. These become areas to improve on, for greater revenue and profit.
Sound good so far? But now you probably want to get more specific. What specific items should your marketing audit focus on? And what is the very first thing that you should do? The answer to that is quite easy. You need to identify each and every way that your business uses to attract customers. Note that by implication there is likely to be more than one way. And if there is only one way at present, does this mean that there couldn't and shouldn't be other ways employed? If you only use one way, consider how vulnerable your entire business could be if that one way no longer worked. Or if it began to be less effective, or more costly.
Consider the following as you work on your marketing audit. Yellow Pages advertising. For many businesses it has been the main source of new prospects, and with effective conversion, new customers. And for some it has been the only source. You are unlikely to be surprised when I observe that these businesses that are solely dependent on Yellow Pages advertising have been extremely lazy, and lacking in creative thinking. Remember, this is not a criticism of Yellow Pages. However, with the dynamic nature of the telecommunications environment, what will happen to these businesses if this should cause this form of prospect attraction to become less effective? Unless they discover something to replace or supplement their Yellow Pages advertising, they risk going out of business.
Yellow Pages was used as an example. Consider newspapers. Consolidation in the newspaper business, combined with tough economic times will shrink the numbers of newspapers available for regular advertisers. Businesses solely dependent on newspaper advertising will also need to increase the number of ways of attracting prospects, or risk going out of business. If it seems that I am being redundant, it for emphasis. As you do your marketing audit, and consider its implications, you need to be conscious of the level of risk associated with only one main way of attracting prospects.
Enough, you say. I get it. I need to have more than one way of attracting prospects. And I assume that it is a case of the more, the merrier.
Yes. The more, the merrier with one qualification. You need to be able to measure the results. Remember that old marketing chestnut. "Half my marketing expense is wasted. The trouble is I don't know which half." Results include the cost of acquisition of each prospect, and the cost associated with converting a prospect to a customer. And if you have several alternative ways of acquiring prospects, as part of your marketing audit, rank them for cost effectiveness through conversion to customers. For example, if two methods of marketing produce prospects at the same cost per prospect, then the cost of converting a prospect to a customer will be critical to their ranking. The real key is to develop as many cost effective marketing methods as you can.
And as a bonus, and something to think about as you do your marketing audit, something that costs nothing or next to nothing. It is called referrals. That means that you ask satisfied customers to help you by sending you new prospects. You may have to figure out the right way to ask. But once you get it right it can be a highly productive, and extremely cost effective way of getting more business. Think about it. The person referred will come to you with lowered defenses. You haven't found him. He has found you. So he is highly predisposed to buy. This tends to lead to extremely high and easy conversion from prospect to customer.
Your marketing audit won't be complete without doing a bit of investigation on conversion rates. Each marketing method will likely result in different conversion rates. This should cause you to analyze the conversion process related to each marketing method. This may help you identify highly effective practices that will work with other marketing methods. Allowing you to replace less effective practices. Proceed with caution, and test before you make any precipitous changes.
Now you have converted a prospect into a customer, through a purchase. An important subject for your marketing audit derives from having customers. And as part of your investigation, be sure you have a method of contacting existing customers. Because this will lead you to another highly effective approach. How effective is your business in selling more to existing customers? Do you have a formalized process for doing this? If not you are missing one of the greatest marketing opportunities around. You have invested a great deal of time and money in actually getting a customer. You need to have a process to maximize your return from that customer. The best way of doing this is to convert him into a repeat customer.
There are estimates that it costs six times as much to acquire a prospect and sell something to him, as it does to sell something to an existing customer. Other estimates of this number are higher, and there may be some lower. But that's not the point. There are also estimates that it costs between $200 and $300 to acquire a new customer. Would you rather spend $200 or one sixth of $200 to earn the same unit profit? You can see how selling more to existing customers will greatly impact your profit. So repeat customers are very important to your business. And I acknowledge that in some rare businesses repeat business is difficult or impossible to achieve.
As you progress with your marketing audit, you should be thinking about your customers, and how you can communicate with them. Do you have a process for collecting names and contact information from prospects. When they have made a purchase you need to update this data base to clearly identify them as customers. This will enable you to contact them with specific offers. Offers that will not necessarily apply to prospects.
Frequent meaningful contact is one of the most effective ways of retaining customers. The significance of customer retention is illustrated by the difference shown above between the $200 cost of acquiring a new customer. And the much lower cost of selling to an existing customer. For every customer you lose, you will have to spend $200 to replace him. So it really pays to work very hard to keep customers from leaving you. Your marketing audit needs to identify your system for retaining customers.
That's enough for you to absorb on this subject for now. If it appears that I am overemphasizing marketing, it's because I am. Nothing happens until a sale is made. Marketing and selling make up the fuel that drives the business. If your business isn't effective here, you really have little to sell.
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