Imagine accelerating your brand's growth with a strategic marketing plan that fits into your comfortable budget. That's exactly what you'll learn from this episode of Digital Horizons, where my co-host, Lana Hill, and I chart the course for a successful marketing year in 2024.
We'll address one of the most significant challenges businesses face - scaling. We examine the importance of measuring conversion performance and the secret weapon of CRM platforms for tracking ROI. We'll share insights on the power of offline conversions and how you can analyze data to supercharge your campaigns. As we wrap up, we'll dive into a conversation about maximizing your marketing budget for profit and understanding your business's profitability numbers.
This will help you identify the precise moment to hit the accelerator and scale up. Join us on this enlightening journey to making informed investment decisions for long-term success.
This podcast is brought to you by Walker Hill Digital
Imagine accelerating your brand's growth with a strategic marketing plan that fits into your comfortable budget. That's exactly what you'll learn from this episode of Digital Horizons, where my co-host, Lana Hill, and I chart the course for a successful marketing year in 2024.
We'll address one of the most significant challenges businesses face - scaling. We examine the importance of measuring conversion performance and the secret weapon of CRM platforms for tracking ROI. We'll share insights on the power of offline conversions and how you can analyze data to supercharge your campaigns. As we wrap up, we'll dive into a conversation about maximizing your marketing budget for profit and understanding your business's profitability numbers.
This will help you identify the precise moment to hit the accelerator and scale up. Join us on this enlightening journey to making informed investment decisions for long-term success.
This podcast is brought to you by Walker Hill Digital
Welcome to the Digital Horizons podcast, your gateway to the dynamic world of digital marketing. Join us as we engage with industry trailblazers, delving into innovative ideas and cutting-edge strategies to empower you to soar ahead of the ever-shifting digital curve. I'm your host, james Walker. Let's get started. Welcome to the Digital Horizons podcast. We've had a few weeks off due to a number of things coming up within the business and being one of the most busiest periods of the year for, I guess, any digital marketing agency, so it was probably not a great time to have launched this, but we're definitely going to get back on track to weekly episodes, and today I have Lana Hill again joining us, my business partner and longtime friend, lana. Welcome to the show.
Speaker 2:Thanks for having me back. Must not have been too bad the first time around.
Speaker 1:I think it was actually one of our most downloaded episodes, so I feel like there was a lot of value added to anybody. I can't remember what we were talking about, but I'm sure it was really good.
Speaker 2:Happy to hear.
Speaker 1:So this is definitely going to be the least prepared podcast that we've done so far. So I have a few notes. But today we are going to be talking about coming into 2024. People probably starting to think about I'm going to really ramp up my marketing or I really want to get some good results for my business in 2024. So today we're going to be talking about what they should be taking into account when they're planning their marketing and then what they should be measuring and then ideally, scaling up to generate more and more of whatever their objective is. So, Lana, you talk to a lot of business owners. What do you find that when you're talking to them, they're thinking about on the money side of things?
Speaker 2:I often ask what are you looking to invest in your marketing?
Speaker 2:And the go-to responses. I was hoping you could tell me and that's a really tricky place for us because we need them to go into it obviously comfortable to spend a certain amount during that ramp up going period, right? So people who have given it zero thought to what they can comfortably set aside in marketing on a monthly basis. It is a challenge to have that conversation with them because if I don't have a starting point of like this is comfortable for us to invest over the next six months as we get things going, it is really just me kind of having to figure out OK, this is what we'd like to spend, but if you're not going to be able to comfortably spend that for six months, then it is going to be very challenging for your business. So they do need to speak to whether it's an accountant or just look at their budgets ahead of time and go okay, I've never done marketing before. If that is the situation they're in, what can I comfortably spend over a few months to get things started and see if this actually works?
Speaker 1:So they're going to comfortably be able to spend this without seeing a return.
Speaker 2:That is, if they haven't done marketing. Obviously, if it's someone who's done marketing, they normally already know what they're spending and whether they are getting a return and are ready to now scale. Or if they're not getting a return, what kind of return do they need in order to have successful results? So I guess, looking at a call I had this morning, they're spending $6,000, $8,000 in marketing and they know what they, how many leads they need to be getting, and they're not getting that. So it's nice to speak to someone who's kind of going okay, this is what I'm comfortably putting aside. However, it's becoming uncomfortable because I'm not getting the quantity of leads I need. So knowing those numbers is so important and that's not something we can always give them. They need to know, from a business standpoint, if they're going to invest X, they need X.
Speaker 1:Yep, because it is an investment. It's not just you spending it Like you are investing in your business. You are generating traffic to your website. You are ideally generating leads, but they might not convert into a paying customer within that first few months of running a new campaign.
Speaker 2:Yeah, people don't give enough thought to that buying cycle and obviously this is something I speak to them about. Make sure they know. Going in and make it crystal clear is you know, people take 30 days to decide to buy cupcakes. I use this example a lot, so anyone who's spoken to me has probably heard this already. But we have a client who sells cakes and cupcakes for birthday parties and we're doing Google ads for them, right? So people are coming to them with a high intent to convert. They're looking for cakes, they're looking for cupcakes and they still take 30 days to decide to buy off of their website. So if someone's not necessarily looking for your services or your products on social, it's probably going to take a few months for them to actually then come around and buy from you, depending on the price point of the product and the need for it as well, and whether it's something they would do on impulse. So it's going to take a while.
Speaker 1:That's going to vary, but they definitely need to have budget set aside as they're going period as we like to call it yeah, and I feel that when you allocate more budget to that period, the faster you're going to get out of it as well, the faster you're going to see a return, or maybe not see a return, but you'll know that it's not going to work. So at least the more budget that's putting in, you're buying data, you're learning more and you're learning quicker if you're putting more budget into this space.
Speaker 2:But again it's about can you get through that period? So if you're putting too much budget in in the early days and you can't make it to the six-month mark because you overspent in the first three months and now the business can't afford to keep going, you're in a worse off position. So that is where we, you know, in our proposal reveals, I say we don't have lock in contracts, but in this the timeframe I give them varies depending on how long I think it's going to take for us to get results. I'll say you know, if you're not going to give it four months, then there's just no point in signing it. It's a complete waste of your money.
Speaker 1:That's a mistake that I think we see quite often is that it's not accounted for. When people are thinking about I'm going to start a new business, I'm going to launch this website, I'm going to sell some product, they're not really factoring in any kind of investment into their marketing. We've spoken to clients who are like I've just spent $50,000 on a website and we asked what the marketing budget is and they say maybe $1,000 a month and I'm like what are you doing? You've put all this money into what. Now you think you've just got a website up, people will come. You need to have that investment into your marketing, drive traffic and drive awareness, and that just seems to be overlooked quite often.
Speaker 2:Absolutely. Yes, it is. I also see the other way around, though, is people are like, oh, I'm going to spend this much on marketing and now they have a terrible website for us to send traffic to. So it's almost like you need to speak to a marketing specialist who's all around her that can help you say, okay, let's spend a little bit of budget and getting a good landing page and then set ex-aside in marketing. If you're just starting a business, if you're spending this Christmas period to decide to create a new business, definitely look at the first 12 months, not just what you need to get off the ground.
Speaker 1:Definitely. And again, we're talking about new businesses, we're not talking about established ones, but you start a new business, you have to drive traffic, you have to create data, you need to learn, you need to spend money to generate traffic. You're buying traffic really Interesting. So we've talked about clients who don't, or businesses that don't have an idea, but what about those ones that do and they're like all right, I know I can invest $5,000 a month, per month in my campaigns. What should they be then thinking about when they're thinking about budgets for the future and from past, that just initial investment?
Speaker 2:Thinking about your ROI and this is going to depend on, you know, if they're a service based business or an e-com. That's going to change. But if they're going to invest that, how much do they want to see out of that? And then there's those components that trickle down. So for a service based business, they're like okay, how many leads should I see? And I've got to be very clear that it's leads that we're going to be giving them. So they then need to go.
Speaker 2:If I want this many paying customers off the back of that, or this many paying clients, what is the value of their client and what is their conversion rate? Because we're getting them the leads, but what's the conversion rate for a cold lead for their business? And have some general ideas of numbers of that, or understand that we're going to be figuring that out over the first six months. So if they've never, if they've been a business that's built off of referrals, it's going to be six months of going okay, for every 20 leads, we get you how many of those are converting, and now we know, you know what they're paying to acquire a new customer or new client, whereas we wouldn't have had that previously. So it is absolutely something that again, kind of going back to that get going period, they need to account for that.
Speaker 2:We're still learning, not just how much it's going to cost to get them a lead, but how many leads they need to acquire a new customer and then as the value of that customer going to be different than a referral probably as well. So that's another learning that we're going to get out of it. Ideally, you know, client walks in and they already know all these metrics, but that's very rare that someone does know all of those metrics. When we do, I get very excited about it. I'm like, wow, your data is beautiful.
Speaker 1:Yeah. So I mean, if they know their average order value, they know their lifetime value, they know their conversion rates, they know how many days to convert, like you have all those, you can reverse engineer that back and say, all right, cool, you want 100 leads and, based on all this, you need to spend this to get them. And that would be like a very clear picture. But 99% of businesses don't have that information. So it's trying to work out and piece together to make that work.
Speaker 2:The 1% of business that does. They're usually going I'm going to hire a new person, so need to ramp up the budget right. So those are awesome clients to be speaking with. In terms of it's just so easy because we know, okay, they're putting on a person, let's do this.
Speaker 2:Usually, the struggle for them is trying to find the right people so that they can scale. But for the rest of the 99% out there, you know again, you just got to count that into the, into the get going period and find ways to measure it. That is one of the struggles as well. As if we're going into it and you know they're not actually willing to do the work of let's keep a spreadsheet or let's set up a really good CRM, or they're not willing to invest in that CRM or that time to do it, then they're always going to not really have that clear idea for their numbers which is going to impact them being able to properly work out their cash flow and work out what they need to be investing to scale.
Speaker 2:So if we're not getting good metrics from day one of their campaigns going live so say, it's a Google campaign, they're getting phone calls, they're getting leads we should be able to see how those are converting and what they're turning into. But if they're not doing good record keeping, then we're not going to have that information. And then come in six months they're like cool, we can see that our business is growing, but we don't really have an idea of what is and what isn't working. We're not going to be able to really work that out on our side either, because we don't have anything to compare the rest of the performance to. We've only got that one piece of oh yeah, this many phone calls.
Speaker 1:Yeah, and that's why I guess it's important using like a CRM, like, say, hubspot or Salesforce, so other ones that integrate directly well, not even directly, you can use Zapier and different things but using offline conversions, so that way that data is feeding back into your ad platform, so that way you can actually measure ROI. If you're not going to, if you know that you're just not going to have the time or capability to be able to keep track of it, or making sure you have got some sort of system that's feeding back into your campaigns or back to your agency to be able to measure it.
Speaker 2:Yeah, love when we're able to work with HubSpot. I mean it doesn't have to be HubSpot. There's other platforms, like Attract that we associate ourselves with, that are great at having that ability. Calls are a little bit trickier, that one usually has to be a bit manual, but we can directly see okay, this lead came from the website, we can tag it that it came from a Google ad. If it's coming from a landing page and we're able to just see all the way to closed and what the business value of that was closed, without having to even have that 30-minute conversation with the clients comparing notes, right, we can kind of see it within their platform and go okay, now that we're doing our we're not just doing our reporting of what's happening in their Google ads platform, we're able to say, okay, this much value has closed from your Google ads this month.
Speaker 1:Yeah, and something that we've been doing a bit more recently as well is we've got clients who are generating a ton of phone calls from their campaigns and they don't know that they haven't got the systems in place to be able to track the performance of these phone calls and which is very frustrating for us because we're running campaigns, we're generating calls that are lasting a decent amount of time because we can see that through the call tracking software that we run, but they're not keeping track of the actual outcomes.
Speaker 1:Like is that leading into? Is it a qualified quote? Is the leading tool a purchase? What's happening there? So what we've been doing now is getting them to take a sample, a random sample, throughout the weekend and I call, just like on a Tuesday morning, whenever it is just note down and jot down the results of these calls that are coming through and even if it's only 10 out of the 100, at least that gives us a sample data set that we're able to use to then start trying to work out what is happening out of this as a basis just gives us some kind of information, because a lot of time we're completely flying blind on these offline conversions that are happening.
Speaker 2:Well, like you know, google ads.
Speaker 2:Again, if they have someone answering the phone that's in an admin position and they're willing to take the time and resources to put this into place, you can track, we can see hey, this call came in at this time. You know, it lasted this long. If they were to note down every time a call comes in the time, then they can, at the end of the month, reconcile that information and be able to work out which one's closed from the Google ads. So we have all the data. It's just about them taking the time or having the processes in place to actually collect it on their side. And again, you know, coming into, you might start off the year or start off your campaign not doing that and then when you're deciding on, okay, well, what do I need to do better over the next six months, you're not going to have that data. So if there's something that people could do over this period to make sure that they're getting set up correctly to be able to scale, that is something that a lot of people are missing.
Speaker 1:I know we're a little bit off topic here in terms of measuring conversion performance, but I think it is so key for when we're talking about investment into digital marketing, because all the data is there, as you said. So if you're thinking about an investment, you can very clearly track that back. For every dollar spent, you should be able to measure back what your ROI is, and I guess that's the beauty of what I think that, for myself, has really appealed to me over the years and why I've got so deep into digital marketing is because of the measurability of it, and so I think this is why we're sort of focusing on this a little bit.
Speaker 2:I might go into. So we've talked startups. You know we've talked a little bit about budget there. We've talked about people who might already be spending in marketing. What could they do to make sure that they now know what they need to do to be able to scale that and understand their numbers better? But those people who are doing everything really well so they're marketing well already what could they be doing?
Speaker 2:There is opportunity because I was speaking to someone today with Lauren, who you've had on the show before. There's that opportunity to just AB test a little bit more as well. So spending some budget into AB testing your email marketing, ab testing some landing pages to be using your budget more wisely. So you're already investing a lot in marketing. You're getting good results. You know. You know what you need to spend to make money. But now could you be spending less and looking at what could you do in the new year to just get more with the budget you've already got aside, and that could be for a short term, doesn't have to be forever. Ab testing landing pages, emails Hopefully you're AB testing your ads, but that's ongoing but just all these little areas that you've got going and just using that better.
Speaker 1:Yeah, definitely, and I think that a key number is understanding profitability numbers, because that should be your scale up.
Speaker 1:I mean for any business, especially as long as you can service it, the goal should be all right.
Speaker 1:Well, I know what I need to do, what I'd like to be making, but I also know that the number that is the minimum is the baseline. And if I'm achieving that number and that could be raw, as it could be a mirror or it could just be, you're looking at your P and L but if, once you know that number and you understand the scalability of your account, then just continually adding more budget makes sense. And sometimes I get a little bit frustrated when I see the opportunity but there's not the willingness to invest more into it. And I guess it's also because we see this all the time. And in terms of business owners, it can be a bit intimidating and daunting because we can see the correlation to what's happening with it on the outside, but they might be like, oh, it's trying to get more money out of me, which is never the case, but knowing your break even or your scale up number and then just pushing further and further because the more you invest, the more you get, more revenue you can generate.
Speaker 2:I actually try to show that in a lot of calls when I'm doing kind of a profit analysis, especially for e-com, I'll go well, look, if you just spend an extra thousand dollars, we might have a chance of making you profitable, but when they come in and spend too little and ad spend, they might not even have a chance of being profitable. So I've been showing that to more and more people going OK, well, here's your average order value, here's your cost of goods, here's the CPA that we're hoping to get to. And this seems like an achievable cost per acquisition. Now, with management fee included and ad spend. If you spend $3,000 a month, we may break even if we get this CPA within three to four months. But that's a hopeful CPA.
Speaker 2:This one over here. This is a more comfortable CPA that we feel we can achieve. And with $3,000, we're only just breaking even. But if you were to invest $4,000, you actually make some money. If you invest $6,000, you're going to really do well. So I will show them OK, we're going to start with $3,000. Try to get to that particular CPA. So we know we're breaking even. But then I need you to quickly invest or we're just going to be sitting there breaking even each month, and what's the point? So it's showing them that from day one of a conversation with them that, OK, I'm happy to start with that number, but we can't stay there or we're not going to be profitable in the long run.
Speaker 1:Yeah, but for those that are listening in here and all these acronyms that we're dropping there, CPA is we're referring to as a cost per acquisition. It could be cost per purchase, cpp. So that's just basically what is costing you to acquire a sale or to acquire a lead or whatever. So that's what we're referring to there.
Speaker 2:Yeah, and you've got to look at which we're going to be spending, which we do our management fee and then when it goes in there and it's just actually spending enough in ad spend to make that make sense. Because I had one person tell me and I was really proud of this. He said you actually weren't the most expensive agency I've spoken to. He's spoken to a few now. He said but you're asking for more ad spend than anyone else and I pulled out the spreadsheet and showed him why. I was like well, here you go, if you don't spend enough, like it doesn't actually make sense for you to be spending this in management fees.
Speaker 1:He was like thank you for that, like you're welcome, we've run profitability analysis like that before and I remember we were showing someone that's because they're margin after everything, after, like they were only making and this was quite a cheap product Like it was probably only about $30, $40.
Speaker 1:And so but we knew from previous campaigns we could probably get about a $20 cost, cpa or whatever, but the leftover margin was only about $8. So then for them to actually run a profitable campaign, they had to spend about $20,000 just to break even on all their ad spend, all their costs and everything. And why would you bother? Like it would just be so much. So that's why I guess, when you are looking at these things and you've got a product that has small margins, that it may not be feasible to be able to run a campaign Like these. It won't work for everything and unless you have upsells, unless you've got cross sales or even you have repeat purchases, it potentially won't work. And I guess why talking to somebody about your budget and looking at this from the start is going to also save you from investing a whole bunch of money and getting nothing out of it or just making running out of loss.
Speaker 2:And we've talked about that from a product side. But this is the same thing for services. I mean, I sat down with someone who had three services one was the $3,000 service, one's $1,000 service and another one's only $500. Then I said, okay, well, is there any cost involved? He said yes, so we kind of pulled out the cost from those metrics. Then we did some Google ads.
Speaker 2:We looked into keyword research and what it's going to cost the $500 one although it was the easiest ones for him to push out and he was happy to get a bunch of those I said it's not going to make any sense because we're going to be paying likely $150 to $200 to acquire that lead. It costs you about $100 to actually out of pocket to get a part of that service done, so you're not really left with much money Like, is it even worth your time? And then you've got management fee on top of that, whereas the $3,000, we were actually going to be paying less to get those leads. Now there might not be as many of them, but he only needs around two to make money off of the campaign that month. So we looked at it and we went okay, these two are actually achievable for us to run.
Speaker 2:But if we run this one, we could do it as a trial, but you're probably never actually going to be profitable from it. So you can do the same thing with service-based businesses. Where it becomes a little bit trickier is it counts on them converting the leads. So that's where, again, we pull into. Are you measuring what your conversion rate is from that? Because if they're only converting 10% of the leads, then we need to understand that. So that comes back to what can we pay to acquire a new lead for them before it just doesn't make sense anymore.
Speaker 1:Yeah, cool. Okay well, Lana, thank you for joining me today. I think that your marketing budget and your investment is such an important part of your overall marketing strategy and getting it right is key to, I guess, long-term success. Understanding your numbers and your conversion rates and your profit margins is going to allow you to scale and also allow you to understand what's not working, what is, and so that way you can push it further or you can actually kill it when you're running an unprofitable campaign. Anything else you'd like to add?
Speaker 2:I really enjoy speaking to people, regardless. If they're going to go ahead with our services and helping them work out, is marketing a good solution for them? Which platform? So, as much as we're not here to sales pitch, if someone does want to have a chat around a marketing game plan for the next year, I'm happy to speak with people. I've also got Will and the team who love speaking with people about marketing and marketing strategies, so feel free to reach out to me at any time. Lana at WalkerHillDigitalcomau, we can line up a time to chat and just get you headed in the right direction.
Speaker 1:Perfect. Well, thanks again for listening today. I hope that there is enough background noise. We have just set up a whole new studio to record these podcasts, in which, if you're watching the YouTube version of it, you can see there's some still some white marks all over the walls and stuff. We're not completely finished, but we want to start recording in here. But it is right next to our lunch room at our office and so we may have some issues in terms of sound until that gets fixed. But thank you again for listening. We will be definitely back next week with another episode, thank you.