There are many marketing strategies that offer you small growth of 5% increase in sales if you adopt that tactic. I have seen people focus on this when their business is in dire straits and needs 20-50% growth.
It may seem silly; after all, isn’t all growth good?
Not necessarily.
You can have a strategy that costs more money than it brings in. You need to know if your marketing spend is bringing a return on the investment otherwise it’s wasting money.
A great example of this is an abandoned cart email on an e-commerce store. These will likely increase the conversion rate by an extra 2-5%.
However, if your site traffic and Add-to-cart ratio is low, at what point do you determine if it is worth spending on a system like this or not?
Let’s look at an example.
Your site gets 3000 visitors a month and converts 1% with an average basket spend of R350
This means that your sales will be R10,500 per month. (3000 x 1% x 350)
A good email automation system like mailchimp can cost around R200 upwards, depending on your audience size. If you increase your sales by 10% your conversion rate becomes 1.1% for a sales figure of R11,550.
That is a net return of around 550% on the spend. Sounds pretty good.
But what if there is a way you could take that same money and instead of increasing sales by R1,050, we increase it by R3,500?
As we are today, a click on Facebook to your site can be as low as 20c per click. For R200 you could realistically target 1,000 more visitors to your site. If you close 1% of those at your average basket spend that amounts to an extra R3,500 in your bank. That’s a return of over 1700%, triple that of the email reminder.
You should always look at how you can get the greatest return for your marketing spend. This concept is called ‘opportunity cost.’ It focuses on maximising return by seeing where best you could spend your money.
Find that avenue and focus on it until you reach the crest of that wave. Then ride the wave and find the next avenue for improvement.
The e-commerce formula for success is simple;
Site visitors x conversion rate x average basket spend = sales
If you can increase all of them, you get exponential growth.
Prioritising site visits allows you a greater opportunity to test how to improve conversion and basket size. Often conversion rate and basket size can be improved for free by testing variations on your copy, product photos and
Get your bottom line and cash flow working. Then try the fancy stuff.
