3 Questions to Ask to Tell Where Your Marketing Dollar is Being Wasted |
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As much as I hate to say it, most marketing dollars that small business owners spend is getting flushed down the toilet.

I just had a conversation with a client and after asking her three questions, identified $15k in dead advertising spend that they can now channel into other areas that will potentially bring multiple six figures in extra sales.

This conversation highlighted something I'm seeing happen quite regularly.

Folks ... please don't blindly listen to your outsourced marketing specialists telling you that the marketing channel they're working with you on is performing well. (SEO, Adwords, Facebook, social media or whatever).

Some (but not all) outsourced specialists focus on the mechanics of managing your ad spend not the strategic or creative elements that drive a return on your ad spend.

So - how do you tell if it's working or not?

It's as simple as always keep these three questions in the back of your mind ...


1. What is the acceptable cost per lead?

2. What is an acceptable cost per sale?

3. Is that channel delivering that or does it have the potential to deliver that?

If it doesn't, tweak it so it does or can it and channel that money into the areas that ARE working.

If you don't know how well it's performing, PLEASE take time to find out.

Put in place mechanisms to measure it.

Otherwise, you can end up flushing five or six figure amounts down the toilet.​

If you're generating leads online, you'll know that Google Analytics and Facebook pixels are a great way of reporting your metrics.  But the thing is with all metrics, it's important to not only measure but monitor them. And when you monitor them, notice what is acceptable and what isn't and do something about it.

To work this out you're going to want to know the lifetime value of your clients and what your conversion rate is.

So  (as a random example), if you sell a service worth $1,000 (say) and leads are costing you $100 each and you have a conversion rate of 1 in 3 that's a $300 cost per sale which is, of course, way too high if that's a once off sale but if your lifetime value of a client is, say $20,000, that $300 is highly affordable.

Here are the biggest money-wasters I'm seeing in the digital space:

On Facebook Advertising

Facebook Advertising is awesome - if you know what you're doing and you pay close attention to each and every one of the parameters of a Facebook ad. If you don't it can end up costing you a packet.

I've seen ads that have generated consulting leads for as little as $2.00 and sales for as little as $50. I've also seen the same ad with the wrong targeting experience a cost per lead of $10.00 with a cost per sale of $500.

Another example ...

Right now, one of our client's ads is getting clicks for 56 cents, and leads for $5 on a $35,000 sale.  In the past, his average cost per lead was somewhere between $80 and $100.​

If you're doing your advertising yourself, spend time becoming an expert. The magic is in the finessing and some of the advanced tactics.

If you're hiring an advertising manager to do it for you, make sure you stipulate what your KPIs are eg. cost per lead and cost per sale and make sure they are proactive in monitoring your results.  Note that I say 'proactive'. Most Facebook advertising management companies are focused on managing the spend NOT driving a result.

On Adwords

This one makes my blood boil a little. I'm seeing outsourced advertising managers just scatter-gunning with non-specific keywords using not only transaction based keywords (eg. accounting firm) but also interest based keywords (eg. tax deductions).

Business owners are spending $4 or more per click, as much as $100 per lead, and they're not getting sales from it.

Without a very intelligent, very specific lead funnel, you're flushing money down the toilet.

Don't get me wrong, you can certain attract clients using interest-based keywords, but it's important to be very strategic about how you go about it.

The quality of leads is way lower and therefore you'll want the cost per lead to be way lower too ... plus it's important to have tracking mechanisms in place to see what your end results are.

Not to mention, the type of landing page you send them to needs to be very different to the landing page you'd send someone to when they search on 'accounting firm'. 

When dealing with outsourced managers who manage your spend ensure they know your KPIs and ensure they stick within those parameters.

What about social media that focuses on engagement not leads?

Engagement doesn't necessarily drive leads or increase conversions but it can.

For every $1,000 you spend on outsourcing social media, you want it to be bringing in at least somewhere between $7,500 and $20,000 in sales (depending on whether you are a product or service based business).

If it isn't doing that, consider this ...

You could instead spend that money generating 500 new leads a month using FB ads (or something else) and of those leads, that could easily generate $20,000 - $50,000 in professional service sales.

Moral of the story ...

Take a forensic look at your marketing KPIs. Every time I do that with a client I identify savings and significant results improvements.

Want to know more?

We're running a FREE webinar. Check out the details below.​

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