Have you spent some time laying out all the strategies you’ll use to grow your business? Even if you have, you may want to update them based on what you’re about to read.
I want to talk about your current marketing plan, so I’m just going to jump right in here. Have you spent some time laying out all the strategies you’ll use to grow your business? Even if you have, you may want to update them based on what you’re about to read.
This is one of the most valuable activities I do each year for my business. It allows me to create a plan, set goals and make a budget. Although simple in concept, a good marketing plan can be difficult to execute, but it’s worth every single ounce of energy you put into it.
We divide our marketing plan into three sections:
- New customer acquisition (this is everything from lead generation to conversion)
- Upsell/cross sell
First, let’s look at the numbers.
To make my plan, I start with a high but realistic goal for growth. At this point, this number is not set in stone; it is simply a starting point and a number I want to achieve.
For our example, let’s use $1 million in new revenue growth for the year. We’ll also need to make a few other assumptions, so let me tell you a bit more about a fictitious business so we can build a foundation. Our 2016 revenue was $2 milllion, average annual customer spend is $3,500 and we average a 25 percent customer attrition rate.
On the surface, you might think all we need to do is start with $1 million in new revenue and work backward. Unfortunately, it’s not that simple. Our real number is going to be much larger than $1 million.
To get the real numbers, we need to add in attrition. For many businesses, attrition comes in three forms.
- New customers who use once or twice and never come back
- Customers who cancel
- Customers who decrease their level of spending with you
You’ll have to decide if all three of these apply to you or not when making your plan. For simplicity’s sake, we’ll just use cancellations. With a 25 percent cancellation rate, we will need an extra 143 new customers, which comes out to $500,000 in additional revenue needed.
Now we know that to grow our business by $1 million in new revenue, we will need to plan for $1.5 million in total new revenue (once we account for attrition). When we look at this from a new customer standpoint, we know we need 429 new customers.
Next I look at the marketing I already have planned and the estimated number of new customers it will bring in. I look at these numbers on a monthly basis. One mistake I see people make is that they want these numbers to even out. For example, in January, they want 36 new customers, and in December, they want 36 new customers, but that’s not likely to happen. It’s much more likely that in January, you’ll get 24 new customers, and in December, you’ll get 48 new customers.
Assuming our existing marketing is good for 183 new customers for the year, we now need to figure out how to get an additional 246 new customers. From here, we can look into two other strategies: increasing the average annual value of each customer and decreasing attrition. But, to get the bulk of those new customers, we’ll need to do additional marketing.
What can we do better?
When I’m planning additional marketing, I first look at what I’m already doing that I can expand or improve upon. For example, we do a lot of marketing at trade shows. Can we do a better job with lead generation or lead follow-up?
Since I already market at trade shows and have working systems and processes for that, what other trade shows can I try? Each year, I take a few flyers to the trade shows I attend. Some years, those flyers bomb (like in 2015, when I lost $40,000 on them). But some years, they work great. In 2016, I took another flyer to a trade show that brought in $1.25 million in new annual revenue. I’m always looking for ways to improve and/or expand on what is already working.
Come up with new ideas.
Next, I brainstorm new ideas. These may be new media or media we haven’t put enough effort into or resources behind. Here, all you can do is estimate how well your strategy is going to work. It’s hard to do, and many times, the estimates are inaccurate, but that’s the way the cookie crumbles.
After I’ve made the plan for how I’m going to get those 429 new customers (a need determined with the exercise above), I now continue planning with a goal to increase the number of new customers I get by an additional 33 percent to 50 percent.
The reason for this is that not all of my plans are going to succeed the way I’d like. Some may work out better than planned, and some may bomb, so I need to plan for that. On a side note, if your plan is heavily dependent on internet marketing, this step is even more important because it is very likely that a rule change could affect your plans and/or the entire media could stop working. We’ve seen this happen many times in Google SEO, Adwords and Facebook. To think it won’t happen multiple times this year and possibly to one of the media you’re using is delusional.
Set those milestones, look at your staff and create your budget.
Once I have my plan laid out, I create monthly and quarterly milestones so I know how well I’m progressing toward my goal throughout the year. First quarter’s milestones will be smaller than the fourth quarter’s, but each month and quarter will have a target number based on the amount of marketing I plan on doing during that time. At the end of the year, the totals will add up to my annual goal.
Now that you have a plan, you need to look at what type of human capital you’ll need to reach your goals. Do you need to hire additional employees or find companies to outsource this work to? How are you going to realistically fulfill all of this new work?
Finally, you need to create a budget. Keep in mind you’ll have to account for any additional employees, plus the extra marketing expenses for media, etc. One other thing: When you’re looking at your budget, be aware that some media is going to cost more per customer than you are paying now.
As you grow and thin out all the low-hanging fruit, costs are going to go up. Some of the new customers you want are going to require a bigger investment from you. Good news, though — if everything goes according to plan, you should have additional revenue to draw from to help pay for the additional expense.
Here at The Newsletter Pro, we’ve used these exact strategies to grow as much as 2,970 percent over a three-year period. Last year, this was the process we used to grow nearly 100 percent year over year. This system is tried and proven. All you have to do is implement it.
by Shaun Buck