Business Marketing Newswire

Archive for August, 2009

In a previous article I discussed how to use an invoice ledger as a marketing tool in for a mailing list campaign. In this article I will discuss how to use the expense ledger.

Understanding sales and income is necessary but it is only half of the equation. When using mailing lists to expand your business it is vital to keep track of the costs as well as the income. By tying the cost of each promotional activity directly to its income, you will be able to determine the profitability of your marketing campaigns and be able to make better decisions on how to buy mailing lists.

ROI – Return on Investment

Nowadays one hears a lot of buzz about ROI. What exactly is ROI, anyway? It is the return on investment of your advertising expenses. Are your mailing list campaigns profitable or not? How are you going to know? The only way you will be able to determine if your marketing investments are making any money is if you track them one by one. It is absolutely crucial that you keep good records. On the income side, you used your invoice ledger to identify all sources of income by categorizing each invoice according to the source of its sales lead. Now on the flip side, you categorize your promotional expenditures according to the marketing campaigns used to generate the sales.

The Expense Ledger

Shown below is a chart of sales expenses for one year that was collected from the expense ledger. You list out all the same sales lead categories that were used in your invoice ledger. In this case we have categories for printing, phone, trade shows, ads, direct mail and miscellaneous. We are going to have to do some estimating here because some of the printing expenses were general in nature while others were tied to specific marketing campaigns. But you can get the idea.

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Graph the Results

After you have identified the sales expenses for all the promotional activities, you can tie it all together and determine the profitability of each marketing campaign (or lack of it). The thing that’s nice about a graph is that you can spot the winners and losers in an instant. Now that you know if your mailing list campaigns are making money or not, you can make better decisions on how to buy mailing lists.

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Now, please bear in mind, when you look at results like these not to panic and do anything rash! If a particular promotion didn’t pan out, it doesn’t automatically mean that you have to abandon it. Sometimes you have to go back to the drawing board and come up with a “Plan B.” You should have a feel for your industry, your competition and the various media outlets and marketing channels available to your business. Your experience, abilities, knowledge and confidence should guide the decision making process.

If you find that the return on some of your promotional expenses is not as profitable as it should be, then ask yourself, “Are there any competitors in my industry that are successful?”; “What are they doing that I’m not?” Try to figure it out. Watch your competitors very closely. On the other hand you might be doing something that is very successful that your competition is completely unaware of or is unable to do. In that case, you’ve got a trade secret and you need to keep it that way.

Winners and Losers

In the previous example, several of the sales categories are pulling some pretty healthy ROI. Phone sales, field sales, referrals, repeat sales and direct mailings are all very profitable. They are all pulling income in the multiples of their expenses. This is a bean counter’s dream. The areas that need improvement are trade shows and magazine ads.

Use This Information to Help Expand Your Business

As you can see from this series of articles, it isn’t difficult to use your income and expense ledgers as marketing tools to help expand your business. This should serve as an example and give you some ideas on how to implement good record keeping in your business and be able to identify the profitable vs. unprofitable promotional activities. Surely you should be able to use mailing lists to expand your business. Most any business should be able to benefit from a well thought out direct mail campaign.

Mailing Lists Direct is a full service direct mail list company where you can find consumer lists, business lists and specialty lists at competitive prices. Mailing Lists Direct provides first rate customer support. No matter what your business needs in the way of an address list or managing your mailing list campaigns, Mailing Lists Direct will be able to satisfy all your needs. Call toll free at 800-741-0116.

Mike Doughty is a small business owner and entrepreneur with a background in direct mail marketing, manufacturing and distributon. During his career, he produced a mail order catalog and worked on many successful direct mail campaigns.

How do you take advantage of mailing lists to expand your business? Taking advantage of  buy mailing lists is one of the most effective ways to increase sales. You should be using your customer list as well as purchased mailing lists from a list broker. But even the best efforts to increase sales by using a mailing list can require very careful analysis and record keeping. In the previous article we discussed using your invoice and expenses ledgers as marketing tools to analyze your marketing efforts. In this article we will discuss the invoice ledger in more detail.

Does Your Business Keep An Invoice Ledger?

Every business should have an invoice ledger. If you have carefully kept track of the lead sources from your various marketing campaigns, then you will be able to identify the most profitable and productive sources of advertising. You can tell a great deal about the workability of your promotions and marketing by doing this very simple analysis. This example uses lead categories for repeat sales plus new sales from trade shows, direct mail, referrals, field sales, phone sales, ad sales and sales from new businesses (plus unidentified new sales). Simply prepare a spreadsheet and tabulate your sales invoices for a given period of time into the various lead categories:

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Next, tabulate the sales from the same period into the number of sales invoices. The number of sales invoices will be needed to calculate the average sales for the various lead categories:

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Next, you can summarize the data:

Graph Your Results

Finally, you can graph the results. You will be able tell at a glance which promotional activities are producing the most. The following graph shows the volume of sales for repeat customers vs. new customers and how the new customers break down into the various lead categories:

Repeat Customer Sales vs. New Customer Sales

In this example only 12.33% of the total sales volume is for repeat customers. This looks like a business that constantly must go after new customers because it has to make 87.67% of its income from new customers. This is a perfect example of why the business must analyze very carefully where to put its promotion and marketing efforts because getting new customers requires a lot of advertising and marketing. This example is very typical of a business that uses a variety of advertising sources to generate sales leads. In fact, it makes about 24 cents out of every dollar from phone sales and about 23 cents out of every dollar from field sales.

Referral Sales

Notice that one of the categories is referral sales. One of the most important ways a business can make income is from referral sales. There is no better advertising than word of mouth. In this example, about one out of every five dollars of revenue comes from referral sales. This means that the business must make up the remaining revenue from contact other than from existing customers. That involves the effective use of advertising and promotions.

A Typical Business Can Benefit From Direct Mail Marketing

This example also illustrates that sales revenue from direct mail campaigns amounts to one dollar out of every ten dollars – not bad considering that this is a typical “brick and mortar” business. In other words it is not what you would call a direct mail business because it does phone calls, field calls and trade shows, but it does make a little over 10% of its income from new customers from direct mail marketing. How would you like to make another 10% in sales revenue? You should be using direct mail marketing in addition to your other promotion and advertising efforts.

Mailing Lists Direct is a full service direct mail list company where you can find consumer mailing lists, business lists and specialty lists at competitive prices. Mailing Lists Direct provides first rate customer support. No matter what your business needs in the way of an address list or managing your mailing list campaigns, Mailing Lists Direct will be able to satisfy all your needs. Call toll free at 800-741-0116.

Mike Doughty is a small business owner and entrepreneur with a background in direct mail marketing, manufacturing and distributon. During his career, he produced a mail order catalog and worked on many successful direct mail campaigns.

Most any business can take advantage of mailing lists to expand their business. Even if you don’t currently use any direct mailing list campaign, your customer list is a valuable asset that can be utilized to grow your business. Hopefully you have also been keeping a record of your sales leads and the contacts you have made with them along with the various promotional actions that have been taken.

You should also have an invoice ledger – even if it exists in the computer or in your bookkeeping software – because you can use this as a tool to analyze your marketing efforts. The road to success is not often a very straight one. A business owner or sales manager must often use a lot of trial and error to get it right. The key is to keep good records of all your promotional actions. Advertising and marketing campaigns can be very expensive. You win some and you lose some. You have to study the successes and failures very closely and you need to keep good records to be able to pull it off.

Using the Invoice and Expense Ledgers as Marketing Tools

Every business should have ledgers for invoices and expenses. You can print them out or export them to a spreadsheet. For the invoice ledger, include columns for invoice number, invoice date, customer name, a description of what was purchased and a lead category or code for how you got the sales lead. Let’s say you want to analyze a time period of one year. Prepare the spreadsheet from all the invoices within that time period. Let’s say during this time period you generated the leads from the following sources:

• Referral – Lead generated by customer referral
• Mailer – Lead generated by direct mail
• Field – Lead generated by a field sales call
• Print Ads – Lead generated by print ads
• Website-PPC – Lead generated by pay-per-click ads
• Website-Search Engine – Lead generated by search engine natural search results
• Trade Show – Lead generated at a trade show
• Phone Lead – Lead generated by phone (NOT a follow up phone call from some other category)
• New Business – Lead generated by new business listings
• Unidentified – You want as few of these as possible

Your list of categories will probably be different, but you get the idea. The whole point is to carefully identify how the lead was generated for each sale. This is extremely important. It’s the only way to tell the difference between the promotional activities that are paying off and which ones aren’t. Now, this brings up another very important point – who answers the phone and how much do you pay them? Don’t have the mistaken idea that the receptionist should be one of the lowest paid people. You want them to have a stake in the sales revenues of the company.

You can offer a small bonus for employees who help in the sales efforts. If you have advertising with a call to action that tells the customer to call a particular phone number, then make sure that person either relays the phone call to a salesperson or logs the source of the lead. If the call is routed to a salesperson, then that salesperson is responsible for logging the source of the lead. If it comes from an ad, then they have to ask, “Which ad”. If it comes from a direct mail piece the have to ask for the ad code (you want to code your direct mailings whenever possible). If it comes from a search engine, then they have to ask “Which search engine?” This is the best way to monitor the effectiveness of all your advertising expenses.

Mailing Lists Direct is a full service direct mail list company where you can find consumer mailing lists, business lists and specialty lists at competitive prices. Mailing Lists Direct provides first rate customer support. No matter what your business needs in the way of an address list or managing your mailing list campaigns, Mailing Lists Direct will be able to satisfy all your needs. Call toll free at 800-741-0116.

Mike Doughty is a small business owner and entrepreneur with a background in direct mail marketing, manufacturing and distributon. During his career, he produced a mail order catalog and worked on many successful direct mail campaigns.