In recent years a number of small businesses partnered with ‘deal’ sites in order to bring more traffic to their store or location. Partnership ‘deal’ oriented sites such as Groupon and Living Social popularized the expectation for people to be able to get a great deal at certain location on a given day. The ‘deal’ given was typically offered to customers at 50% off of the retail price.
According to news reports, the programs worked remarkably well, except that they didn’t work for the business actually selling the ‘deal’ to customers. Even after getting the influx of new customers, businesses owners surveyed did not feel that starting a ‘deal’ partnership with these companies was good for their business in long term.
The critical issue to consider is not whether these programs work effectively. The critical issue is knowing your business’ sales numbers well enough to decide whether to do this or any special promotion. The recent controversy with ‘deal’ sites highlighted the fact that you really can have too much of a good thing, if you don’t use the right numbers to make your decision.
How many prospects are generated by the business’s advertising dollar(s)
What is the percentage of customers converted from prospects
How much does each customer spend with the business on average
Without an active focus on these numbers a business can engage in costly advertising and promotional programs, without seeing growth in their long term profits. Traditionally, advertisers and marketers focus solely on (A), assuming that the way to get more profits is to spend more money on prospects. (In the case of running a ‘deal’ this additional spending comes in the form of a willingness to take less revenue and profit on every sale).
Before any focus on spending more resources on advertising, an owner or manager should measure and look first at their conversion percentage (Letter B above), and ask some questions of both themselves and their staff:
Of the prospects who visit our store, location or website, is there something that we are doing to turn them away? Is there something more we can do to get them to buy?
Are there common reasons as to why they do not buy from us, once they have chosen to visit us? Are we carrying the right products and services? Are we offering the right features for our location?
There are certainly more questions that the business owner or manager could ask. Increasing the rate of conversion is efficient because it typically does not require new spending, and makes all new spending even more effective.
In the same way, another crucial number to look at is how much each customer spends on average during a given time period (a year perhaps), which is letter C from the first section. Measuring and improving this number is another “first step’ to take before additional spending on advertising. It causes businesses to ask more “tough questions”:
Do we offer enough opportunities for our customers to buy more from us at the point of sale?
Are we making good use of our customer database, whether or not it is mobile, email or direct mail?
Is our sale pricing enough of an incentive to consider us over our competitors?
Measuring both this number and the conversion rate is something that you can discuss with a qualified marketing consultant. Often, companies receive solicitation over the telephone or by email from companies who promise that they can achieve increased internet search rankings for them.
However increased traffic to your business’ website or store is only one of the numbers to focus on. Our company can help you with all three numbers: A) increasing traffic; B) increasing conversions and C) increasing the average purchase amount with each buyer. We are skilled in helping you to provide additional incentives as well as making the best use of your database to achieve higher profits. Call us today to discuss your current position and where you would like to see your business grow. It is our passion to assist companies like yours who want to grow their profits.
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Chik Quintans is a Digital Marketing Strategist with a passion for helping sales teams and businesses grow. As the owner of UnderGround Marketing Society LLC, creating a strong online brand and building a broad footprint online for sales teams and businesses are he and his company's areas of focus. Whether that be leveraging marketing channels and approaches such as social media, reputation, search engine optimization (SEO), video marketing and more. Chik Quintans can be reached on LinkedIn where you are invited to connect. https://www.linkedin.com/in/chikquintans