Let’s face it: Most business owners running a service-based business are overworked so that they don’t have time for private matters or to work IN the business instead of working ON it. And even if you are finished with the daily operations you are thinking about other stuff to grow your business.
A part of that is marketing and most business owners are overwhelmed by the tactics and tools they can use for client acquisition. You probably think that you need to start with blogging, publishing social media posts on a regular basis or running ads on Google and Facebook.
But it’s all about the numbers that run your business and because of that you first need to clarify that. There are 3 key questions you need to answer to make marketing work for your business.
- How many new clients you need per year / per month so that your business makes enough profit
- What is the average value of a client
- How many Leads you need to grow the business consistently
If you work out these numbers it will have a huge impact on your business and the profitability of your marketing efforts. Some of these benefits are:
You are more likely to be successful
People with written goals are 50% more likely to achieve than people without goals. You can document your marketing goals and progress simply with an Excel sheet.
You can measure the following tasks within your sales & marketing team:
- Number of Prospects
- Number of Sales Appointments
- Lead to Sale Rate
This will also help you to be clear whether your marketing is on track or not.
Keep the overview
Schedule an update meeting at the end of the week. It’s better to track the results on a weekly basis. If the desired results are not achieved, the activities can be adjusted. Otherwise, you won’t know if your business is doing well. But which numbers do you need to measure exactly?
Annual Revenue Goal:
This is the targeted revenue you want to achieve with new clients. Don’t include your existing clients into the calculation. This is the amount of additional revenue you need through attracting new clients.
Service / Package Price
You probably offer different services and are charging different amounts for them. Take a look at your existing client base and document which services they have booked. This will help you to calculate your average price per service.
Amount of new clients you need
Now you will know how many new clients you need to hit your annual revenue goal. For example, if you want an extra £250,000 in revenue this year and the average client pays £10,000, you will need an extra 25 clients this year.
Amount of Discovery Calls
I call sales appointments “discovery calls”. The reason behind that is, that I want to ensure the client really benefits from my service. Arrange 15- or 30-minute calls with your prospects and find out, if you are a good fit.
Amount Of Monthly Leads Needed
According to Daniel Priestley, Entrepreneur and Co-Founder of Dent Global, you need 60 Leads to achieve 10 appointments and 2 sales.
Let’s turn this into an example:
New Revenue Planned = £250,000
Average Customer Value = £10,000
Amount of new Clients needed (Revenue divided by average Customer Value) = 25
Number of Appointments needed (number of Clients needed x 5) = 125
Number of Leads needed (number of Appointments needed x 6) = 750
Monthly Amount Of Leads need (750 Leads divided by 12) = 62.5
You will need 62.5 Leads per month to hit your annual revenue goals.
Your Ideal Cost per Lead
15% of your revenue should be invested in Marketing – including costs for tools, outsourcing tasks and/or the salary of an in-house marketing assistant. If 2 Sales are worth of £20,000 revenue, your marketing budget should be £3,000 to generate the necessary amount of leads and sales appointments. A Lead can be defined for example as a newsletter subscriber after downloading a free report or ebook.
You know that you need to generate 52 Leads per month with a marketing budget of £3,000. So the calculation of your ideal cost per lead would look like:
Revenue of 2 Sales = £20,000
Marketing Budget (Revenue of 2 Sales x 0.15) = £3,000
Ideal Cost per Lead (Marketing Budget divided by the Number of Leads needed) = £3,000 / 62.5 = £48
Ideal Cost per Appointment (Marketing Budget divided by Number of Appointments needed) = £3,000 / 10 = £300
Now you are clear on your marketing numbers and able to measure the profitability of your marketing activities. Facebook Ads can be an interesting channel to generate leads for your business. A monthly investment in online marketing can look like this:
Campaign management fee of an agency = £500 per month
Costs for tools (web hosting, email marketing, squeeze page etc.) = £100 per month
Facebook Ad Spend = £2,400 per month
The key mistake made by most service-based businesses is that they don’t count costs for an agency or a freelancer + tools as marketing costs. If you receive a report from your agency the ideal cost per lead based on the ad spend is £2,400 / 62.5 = £38.4