There’s a phrase that I use pretty much every single day and this phrase is really the way that I think about marketing and that coveted return on investments. The phrase is, “Marketing Math,” and it’s a little bit controversial in the sense of, I believe that almost every single form of marketing that you do can be tracked.
There can be some kind of direct response element to make sure that whatever you’re putting in, you’re getting more money out. Now there are some things that you’re going to have to play the long game on. For example, this particular video. I’m playing the long game with content marketing, so I might not get an immediate ROI, but as more and more people are watching, if I have some ways to track this particular video on this particular campaign, they might say, “Hey, I saw you on YouTube,” for example, or Instagram, so I can then kind of track it back.
For most things, it’s really a simple math equation. You put in X amount of dollars and you should get X amount of dollars out. But there’s one element to this equation that most business owners fail to realize. And that element is lifetime value of a customer. I love to pick random niches and industries … so, let’s say you are a chiropractor and you’re looking at, “Okay, I’m going to invest $1,000 in paid ads.” Facebook ads or Google ads, doesn’t really matter the platform.
So, you’re going to invest $1,000. What you need to then take a step back and look at is, let’s say that your average first appointment is $100. You may say, “Well, I need to get 10 appointments to pay for that marketing doubt, that marketing investment.” That’s how a lot of business owners think about it, so if I don’t get 10 appointments, that was an utter failure. But where I have to push back and where I want you to start to think about and actually do the math is what is that lifetime value?
Of those 10, what is your closing percentage into another appointment and another appointment and referrals? You might say, “We’ll that 10, five people are going to come back, and on average they stay for two years,”, so now they’re worth $75 they come typically twice a month for two years. Now all of a sudden the average lifetime value might be $1,500 or $2,000 and that’s not even factoring in the referrals that they’re going to drive as they get a good experience with you. The way that I then would look at it is if you put $1,000 in, as long as you’re getting at one new customer, one new patient, in the long term, this is paid for.
Now, I’m not saying you should only be getting one new patient for $1,000, I’m simply saying that you can’t size it up and say only from that initial spend, it didn’t produce $1,000 so the return was negative. You have to really fully understand that lifetime value of a customer or a patient that comes in the door. How often are they going to come? How much will they spend? That’s going to take a little bit of time for you to do the digging and figure out those numbers.
But until you have that number figured out, you really cannot effectively deploy things like paid traffic and TV ads or radio or anything candidly that that’s going to drive a direct response. You have to know your numbers and you’ve got to have down that marketing mass. So you know if you put in $1,000 you’re going to get 20 leads, and of those 20, 10 are going to schedule an appointment, and eight are going to show up.
Once you start to get those numbers and that Marketing Math again, you literally can scale that campaign until the cows come home. But you have to know your numbers first. Get the marketing math in place, and then you can scale to levels that you’ve never seen before. Hope this was helpful. Check our website and other marketing blogs to learn more!