Most online marketers assume that if they’re making a steady income that they’re succeeding with their online marketing. They measure success by measuring whether there’s more money coming in than there is going out. I suppose that’s a decent way to measure success. But doesn’t it really depend on how you measure success?
If your goal is simply to make more money than what you’re spending and to stay in business right now, then maybe the “income must be higher than outgo” is a good way to measure success. But I’m going to make an assumption and say that you’re also hoping to be in business for many, many years. I’m going to assume that you want to do more than just get by. I’m going to assume that you want to make sure that you won’t go out of business if the economy takes a hit or if you experience a lag in sales.
That said, in this three part blog series I’d like to look at three smarter ways to measure the success of your online marketing campaigns…
Method #1: Future Banking
I borrowed the term “Future Banking,” from the author and small business marketing expert Dan Kennedy. According to Dan, future banking is determining how much money you’ve deposited into your future bank account through acquiring a new customer relationship. For example, let’s assume that I KNOW every new customer I gain is worth $100 of yearly income. By this I mean that, on average, my customers spend about $100 a year on my products or services.
So let’s look at a simple selling situation as most marketers would look at it, then I’ll show you how to look at it from a “future banking” perspective.
The Casual Marketing Perspective
Let’s assume that you run a campaign which costs you $500. Three new customers each buy a product which is worth $250 in response to the campaign. That’s $750 in income and after deducting your $500 investment, you’ve got $250 in profits. Assuming that each product requires $75 to create and to deliver, you’re now down to a measly $25 in profits.
Most marketers would consider this a pretty disappointing Result. They probably wouldn’t run the campaign again or create a very strong continuity strategy for making more sales to those three customers. They’d probably have a lot of anxiety about running new campaigns and they’d probably worry that if they did run the campaign, they’d only make two sales and that they’d lose money.
This is what business looks like when you only measure your online marketing success according to immediate ROI. There’s no sense of investing in growing a business; it’s all about making money. Now, let’s look at the same situation from a future banking perspective.
The Future Banking Perspective
Let’s assume that you know, on average, that your customers will spend about $100 a year with you. A good marketer will look at the above situation and see it as an open door to turn that $25 profit into $300 over the next year, $600 over the next two years and $1,500 over the next 5 years. Not only will they run the campaign again, they’ll also create a continuity strategy for following up with their customers and for generating new business.
They might even spend up to $25 per customer per year just on continuity strategies like email and direct mail because they know their numbers. They know that $25 invested will equal about $75 in profits. That might not sound like much, but multiply it by a few hundred and see where it could put you in a few years. Now, let’s consider the difference between the “now banking” perspective and the future banking perspective….
Future Banking vs Now Banking
Who do you think is more likely to run the initial marketing campaign again…the now banker or the future banker? Who do you think will have less anxiety when creating new marketing campaigns and investing money into acquiring new customers? Most important, who do you think will have the power to create more sustainable growth and to beat out their competition by spending more money on new customer acquisitions?
As you can see, there’s more than one way to determine how successful your online marketing strategies are, and this is just the first method. Look for two follow up blogs in this series to see the other two methods.