There are way too many methods of advertising to cover in this one post. My intent here is to show you what you should be looking for when paying your hard earned cash to some advertising company. And to make sure you don’t lose any leads along the way.
Before you even look into advertising you have to know who much work you can handle. If you’re able to sell X amount of units don’t Go too overboard, not being able to keep up with demand will make you look unprofessional. On the other hand, you will have some flaky clients that will cancel at the last moment or ask for a refund, so you do want to overbook just a little bit. Are you confused yet? Great, this is business.
Test and optimize
You’re never going to know ahead of time what’s the best plan to implement. Your only option is to test and optimize. If your max output is 100 units of whatever it is you’re selling aim for 150 sales. With time you will find out if you should be aiming for 150, 125 or 200. Every niche has its own ratio of flaky clients. Remember you’re not actually trying to sell 200 units, so don’t stress yourself out trying to meet every client’s needs. That’s one of the upsides of overbooking, you get to pick and choose your clients.
If you find yourself working overtime to sell 110 units that’s fine, but if you’re having a hard time keeping up cut back on ads ASAP.
How many leads do you need in order to sell those 100 units?
You probably heard the term conversion rate. To calculate it you need to find out how many leads converted to a sale. The numbers can vary but if your conversion rate is less than 5% stop paying for those leads. If you find that 5% or fewer leads are converting that advertiser either doesn’t know what the hell he’s doing or is feeding you crapy leads he has left over from another campaign.
If you were to stop people on the street and offer them your product some will ultimately buy. The conversion rate is going to suck at 1% or 2%. And it’s going to take way too long. But when you pay someone to provide you with leads that convert 3% you are the one doing all the work, not your advertising agency. 3% are going to convert if your offer just makes sense.
You should have a 10% to 15% conversion rate. That means that you got good leads and your sales team work like a well oiled machine. So to sell 100 units you need about 1,000 leads or so.
What types of ads should you go for?
Cross the ones you can’t quantify off your list. Things like radio, TV and billboards. Advertiser selling those methods will tell you that millions of people are exposed to their ads, but if you check the conversion rate you will end up with less than 3%. Don’t get me wrong, those methods are great for brand awareness but not for making sales.
Go for advertisements like Google’s pay per click or Facebook ads. And supplement that with a website for your brand. Pay per click ads are expensive today, but they still allow you to track your conversion rate (better deal with the devil you know).
Too many businesses close shop because the number didn’t add up. Rise prices if you need to but don’t take a deal that has you paying for some dream the has a snowball’s chance in hell of working out. There are a lot of crooks out there that will charge you thousands of dollars for advertising campaigns that won’t even allow you to break even, so watch your back.
So how much do you spend on advertising?
Starting a business is like walking in the dark, you don’t really know how much to spend because you might not make it back. So start small, pay for 100 to 200 clicks and see how well they convert. If none of them convert it’s time to check your offer. But if about 10% convert you’re doing fine. Next round double up your budget aim for 400 clicks, and see if you still get the same conversion rate. And don’t forget to retain your customers, there’s no point in getting new customers if you can’t keep your existing ones.
As long as it’s working keep increasing your budget about 25% to 50% each round. This will do two things, it will allow you to track your progress and increase your production rate safely.