Do the math

Rough Notes, May 2003 by Jans, Michael

BOOSTING SALES EFFICIENCY

The words tell only half the story in marketing

Many people think marketing is sizzling sales copy, dramatic headlines, irresistible offers, and so on-- things that make the reader dive for the phone. They're about half right. Words are the visible part of the marketing process. They're what the prospect sees. They're also what your competition sees; and as long as they don't understand what goes on behind the scenes, you'll remain miles ahead of them-even if they do try to copy what you're doing-because the bigger part of successful marketing is behind the scenes.

Let's look at it this way. Marketing involves setting up systems in the total sales process that replace manual labor. These systems swarm out to the marketplace like Army Rangers, put a bunch of prospects in your funnel, and either deliver them to you marked "sold"--or warm them up for the final close.

In order for these marketing systems to work, they need words; but they also need the invisible part-math.

You've got to "do your math" to turn your agency's marketing machine into a money machine. And you thought marketing was exciting and creative? Sometimes it is; but you must do the boring, mundane, drudge-work of "doing your numbers." Here's an example:

We're currently working on a Web site project for a client where 5.2% of every visitor "converted." In this case, that meant they completed both the quote and application form and had them automatically e-mailed to our client's office. We worked on the words by adding a series of "credibility-boosters," and this one change bumped conversion from 5.2% to 7.4%-a 42% spike. The words had done the work, but the math was what told the story. It really didn't matter how good the changes looked or how much my client liked them. What mattered was the math.

You already know you need to test your balance sheet and measure your P&L every month. It may not be the favorite part of your job. On the other hand, a robust balance sheet and a generous P&L will put a smile on the face and zip in the step of any agency principal.

It's the same with direct marketing. The numbers are our scorecard and they tell us what to do with our campaign:

* Leave it; you've got a winner. So roll it out fast (and keep measuring).

* Tweak it for changes and run it again.

* Run a "test" against it and see which one wins.

* It's a stinker; you need to kill it, bury it and move on to the next campaign.

Here are some of things you want to count when you "do your math" in marketing:

Cost per lead per source. Campaigns often use more than one type of media. For example, you may run a campaign that uses fax broadcasting and e-mail. The cost of e-mail is nearly free; faxing is not. If you mixed them all in the same analysis and just came up with a cost per lead, you might never know if you're making or losing money on the fax campaign. You must trace the lead back to the source. Close analysis can give you extremely valuable information.

Cost per lead per source-per event. Sometimes you can really put media "to the test." For example, you might use two different "subject lines" with one going to half of your group and the other to the other half. Then measure the cost per lead per source for each of these two events to determine which subject line pulled the best.

Cost per sale per source. Cost per lead is important, but you must "follow" those leads to the ultimate result: sales. And, of course, if you're testing different "events" from the same source, you'll want to see if you can trace them back to the original pitch.

The ultimate test: return on investment. Marketing is the only place where you can go and get returns of 100% or 1,000% or more. This measurement will tell you that. Quite simply, you determine how much you spent on your campaign and how much you made. (And keep this in mind: plenty of industries are thrilled to go "upside down" to get their first sale-because they know the lifetime value of their customer.) So how much are you willing to spend to get a client? And how long will you keep them? Five, seven, nine years? Longer? Keep investing in your marketing-and measuring your return-and over the long haul, you can build a very profitable empire.

In the next column, I'll show you some examples of what other agents are measuring-and give you some easy methods to measure your response.

The author

Michael Jans, CAE, is the president of Insurance Profit Systems, Inc., and the founder of The Quantum Club Coaching Program for Insurance Agents. For more information on High Impact Marketing, visit www.insurancemarketingtips.com or call their office at (800) 606-0477.