Marketing can be complicated. To make things easier for myself, I like to look at the math of marketing. Math helps me better understand how I can promote my business and the businesses of my clients in a more effective and efficient manner. This month all my content will be focused on looking at marketing through the lense of math. Don?t forget to check out my YouTube channel for my video content!
I believe one of the challenges of marketing any business is knowing where to start. Even as an ?expert? with a decade of experience in digital marketing, there is always this moment after I sign a new client when I feel a bit nervous. That feeling comes from the sheer number of paths I can take to promote my new client?s business.
Advancements in technology have made it easier to build websites, use social media, and incorporate email marketing. Newer technologies like chatbots and automation can be a big help, but they can also add additional wrinkles to an already complex puzzle.
Factor in that as a small- or medium-sized business your budget, in terms of time AND money, is limited, and you can see how important it is to make the correct decision when it comes to developing a marketing strategy.
To ease my nervousness and to help me organize my thoughts, I began to look at developing marketing strategies using the imagery of a marketing funnel. Also known as a sales funnel, the basic idea of a marketing funnel goes like this:
- You making people aware of your products and/or services
- Through a series of marketing/sales tactics, you move people down the funnel
- Prospective clients become being aware of who you are and what you do and continue on down the funnel until they make a purchase
Depending on who you ask, there are different levels to the funnel. But the core idea is to turn leads into paying customers.
Using the idea of a marketing funnel is useful for me because it provides a starting point. It gives me a way to structuring the strategies I develop for my clients so I can create a roadmap they can follow to marketing success.
And what is my very first step when I?m looking at the marketing funnel? I like to look at conversions.
Let me explain what I am talking about by looking at the different levels of conversions.
New Followers Conversions
Let?s begin by looking at turning people who do not know anything about you or your business into followers of your content.
A new follower can be someone following you on Facebook, Twitter, YouTube, or any other social media platform. It can also be someone signing up to receive regular email blasts from you. New followers are the people entering your marketing funnel.
This conversion can be hard to quantify because you don?t always know how many people see your messaging. Therefore, you cannot calculate the percentage of people who became followers after seeing a certain message. You can make your job a little easier if you purchase ads online since most platforms detail how many people will see your messaging.
Click-Through Rate Conversion
Your click-through rate is how many people see your messaging and are compelled to click on it to learn more. This can be someone seeing an email and clicking through to a page to learn more about your services or seeing an ad on social media and clicking through to a landing page to schedule an appointment. Click-through rate is usually one of the steps of moving someone down the marketing funnel.
Qualified Leads Conversion
Before I go into what a qualified lead conversion is, let?s take a quick moment to define what a qualified lead is. A qualified lead is a person who meets your target audience, has seen your marketing materials, and appears to be someone who is serious about making a purchase. This can be someone who is a regular follower of your marketing material or a person who sees it for the first time.
A qualified lead conversion is generally the next step of moving someone down the funnel. After they take the first step of clicking through on the marketing message they see, they take the next by acting on a call to action and moving themselves further down the funnel.
Your closing rate is the percentage of people who make a purchase after getting to the bottom of your funnel. This can be by speaking directly to a salesperson or arriving at a place online where they can make a purchase.
So How Do You Figure This All Out?
Let?s do some math and see how this works in practice by starting at the bottom of the marketing funnel:
Say you are the owner of a business which sells in-home water purification systems. To meet your organizational goals you must sell 10 new units each month. Based on your history you are confident that if you or someone on your sales staff get in front of a qualified lead that you have a 50-50 chance of closing the sale. So your closing rate is 50%. This means that you or someone on your sales staff must speak directly to 20 qualified leads each month..
So how do you get those 20 qualified leads? By looking at the step in the funnel directly before they get to closing.
Going back to our example of the water purification business, you have a landing page which you use to schedule appointments. In your experience, one in four people who see this page will schedule a meeting with a salesperson. That means your landing page has a 25% conversion rate. A little simple math tells us that you need to get 80 people per month to your landing page.
So, how do you get 80 people to your landing page? To figure this out, we will have to look at your click-through rate.
Sticking with the water purification business, an analysis of all your marketing channels shows that on average one in ten people who see your messaging every month will click through to see your landing page. This means you have a 10% click through rate, which means you have to get your messaging in front of 800 people each month.
So how do you get your messaging in front of 800 people? Well if you have 800 email subscribers or social media followers, or a combination thereof, you might be content. However, you probably want to expand your reach as much as you can to help you reach that required number, so you still look for new followers.
As detailed above, you cannot calculate new follower percentage without knowing how many people actually see your messaging. Because of this, you choose to buy ads on Facebook. Part of your Facebook ad strategy is to purchase ads for the sole purpose of growing your email list and social media following. Using their analytics and reviewing how many new email subscribers and social media followers you earn each month, you determine that one in five people who see your messaging will become a follower, meaning you have a 20% new follower rate.
You are already at 800 total followers, so you do not need to get 800 new followers each month. Your target is 100 new followers each month, so you need to get your messaging in front of 500 new people each month who are not aware of your in-home water purification systems.
It should be noted that I overly simplified this process a bit. Chances are there are different levels of your funnel and that your conversion rates may not be as high. But the underlying principle still applies. If you can identify the steps in your funnel and calculate the conversion rates from one step to the other, then you will begin to understand how you should promote your business. This provides the starting place that so many businesses do not have.