marketing requires ruthless accountability.
by jassen bowman
at all times and in all circumstances, you need to hold your marketing ruthlessly accountable for results.
more: the secrets of multi-hit marketing | grow faster, be more efficient | your sales funnel needs systems | how tax resolution works | 4 tax resolution industry flaws | need a new service line? consider tax resolution
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this is an inherent difference between direct response marketing and image advertising or branding. in a practical sense, this means that you need to test, track and measure everything you do in your marketing.
if you can’t measure it, then don’t do it.
in other words, you should be able to track where every dime of revenue that you generate comes from. if a client gives you a check for a thousand dollars, then you should be able to go back and say exactly which marketing campaign, and even which step in that marketing campaign, whence that thousand bucks came from. you should be able to track the roi on every bit of marketing you do.
this is how you can make rational decisions about where to invest your marketing dollars. this is what permits apples-to-apples comparisons across seemingly incomparable marketing media.
for example, with radio advertising you are typically going to be quoted ad rates based on the reach of the radio station. broadcast media sales reps will talk to you in terms of the thousands of people reached, referred to as cost per thousand, or cpm. compare this to ppc advertising online, where you are paying on a per-click basis. these two different media can’t be compared directly based on these two cost models.
so, you have to track your results and view them in equivalent terms. after a month of advertising on both the radio and via google adwords, you might discover that your $8,000 radio campaign generated 40 phone calls – that’s a $200 cost per lead (cpl). but over on google, where you’re paying $30 per click, you find that one in four people fill out your lead form – that’s a $120 cpl. now you have a metric that you can use to directly compare these two very different marketing media and campaign types.
this is probably a good time to address an important issue:
you need to have reasonable expectations about your cost of client acquisition.
for tax preparation, i firmly believe that you should be willing to invest the full first-year tax prep fee in order to acquire a high-value client. so, if your average 1040 tax prep fee is $450, then you should be willing to invest $450 to acquire that client, because if you do things right, then they should stick with you for years and years, generating very high lifetime client value (lcv, another important metric).
in tax resolution, because the fees we are paid are so much higher than tax prep, you can afford to spend more to acquire a client. a typical large, national, boiler room telemarketing operation will have a cost of client acquisition in excess of 30 percent of the fee paid. paying $1,200 in sales commissions, list costs and other overhead is not uncommon on a $3,000 client.
direct mail tends to generally cut this number in half. when you can set up a system where you insert $600, and $3,000 comes out the other side, you’ve created a beautiful business. this is really the key to building a million-dollar practice.
as a rule of thumb, i believe you should be willing to spend up to 1/3 of your client revenue to acquire the client. if you flip that around, you should aim to achieve a 3x roi on your marketing expenditures. this is a very rough and general rule of thumb, but in my experience, it’s a rule that works really well for tax resolution marketing in particular. compare this to the 1x roi metric for the first year of a tax prep client that i mentioned earlier.
let’s define a few things. in marketing and sales, we throw around words like “leads” and “prospects” with reckless abandon. this is particularly true for me when i get talking about tax lien lists. within the tax resolution industry, these are frequently referred to as leads, which is not at all accurate. in actuality, this is just a list.
lists are not leads.
this is important to keep in mind, and it’s not just semantics. lists can be mailing lists of new homebuyers, tax lien lists, lists of new business formations, and a bazillion more. lists are lists.
so what’s a lead? a lead is somebody who has requested information from you in response to your marketing. a lead could be somebody who filled out a web form, registered for a dinner seminar or called in to request your show & awe kit (response package). another way to put it is that a lead is somebody who has expressed interest in your services.
next on the ladder we have prospects. a prospect is somebody who is actually going through the process of interacting with you and going through your sales funnel. in other words, a prospect is somebody who is at least “playing ball” with you. personally, i don’t consider a tax resolution lead to become a prospect until after i’ve conducted an initial consultation with them.
last, and most obvious, we have clients. a client is anybody who has actually paid you money. if they sign a power of attorney (2848), but never paid you, they’re still a prospect.
the real thing to keep in mind here is that everything that you do marketingwise must be held accountable for results. you want to have good roi, but you have to track everything in order to be able to properly compare roi across marketing campaigns.
there is an old saying attributed (incorrectly) to p.t. barnum, the circus entrepreneur: “i know that half my advertising is successful and half my advertising is a waste of money. the problem is i do not know which half.”
if you are in that situation, then you need to stop. if you don’t know which of your marketing is effective and which isn’t, then stop everything. don’t spend another dime until you put processes into place to be track all your results and hold your marketing accountable. in order to do that you, must …
test, track and measure
right in line with ruthless accountability comes test, track and measure. if it cannot be tested, if it cannot be tracked and it cannot be measured then do not do it.
let’s start by mentioning something that is traditionally impossible to track: sponsoring a local youth sports team. sure, it feels good to see your name up there on the outfield wall of your local little league team, but most such sponsorships have zero real business value, because just having your name up there does nothing. if you’re doing this, sponsor the team for the sake of sponsoring the team – don’t fool yourself into thinking you’re doing marketing.
fortunately, there’s a way to track and measure just about everything. what can we do to improve our massive section of the right field wall?
easy! make your logo smaller, throw up a question and add a call to action with a tracking phone number.
slow down, jassen. what was that???
to make it trackable, don’t just put up a logo. no offense, but your company name and logo are actually pretty worthless. instead, have a smaller logo (or even none), and ask a question in your space: “is the irs making your life difficult? call 206-345-6789”
a question that prompts people to think. a call to action (the word “call”). and a tracking phone number. this is not your main office number. it’s a rental number tied to a tracking service that forwards to your office line, and the tracking service lets you see how many calls you get and when.
there, in example format, is how to convert terrible “image advertising” into a more effective, trackable marketing. again, if you cannot track your marketing, then don’t do it.
let me give you another example. sitting here in front of me i have a val-pak envelope. val-pak can work great for marketing, if used appropriately. one of the keys to even know if it’s working or not, however, is to make sure you always put a different tracking code on every month’s offer. if you’re directing people to call in, then use a different phone number each month. if directing people to the web, use a different url, etc., etc. changing it every month lets you track which month’s mailing a lead is coming from.
so right now i am looking at a pizza coupon from a local company (not a franchise). there are two coupons on the sheet, and they do, in fact, have tracking codes on each coupon. in fact, the tracking codes are different. i also happen to have last month’s val-pak, and am looking at the same pizza company’s flyer. guess what? same coupon codes. ouch, and they were doing so well up to that point!
if i use one of these coupons, the local pizza store owner has no idea whether it was last month’s marketing dollars or this month’s marketing dollars that convinced me to purchase their pizza.
when you are doing direct mail, always have a trackable response mechanism. for example, if you are sending out postcards or letters and directing everybody to a telephone number, then make sure you use different phone numbers for different mail pieces in the marketing sequence. it is incredibly inexpensive to rent unique phone numbers for the duration of a marketing campaign, which allows you to count how many times that phone number was called. this way, you know which mailer in the sequence was most effective.
let’s look at the “testing” aspect of the header for this section. whenever possible, you want to always be testing different elements of your marketing campaigns. in most cases, you’ll want to do what is called a/b split testing.
let’s say you have two postcards with the exact same offer that you’re sending to the exact same list. however, on each postcard you’re going to test a different headline. for example, one might say “$199 flat fee tax preparation,” and another might say “50% off tax preparation.” each postcard also uses a different rented forwarding phone number for tracking purposes.
each postcard is going to a thousand people off the same mailing list, for a total mailing of two thousand homes. let’s say one postcard gets 25 phone calls; the other post card gets 75 phone calls. well, all of a sudden, based on this a/b split test, you know which headline did significantly better in terms of phone calls.
but it goes beyond that. now that you’re testing and tracking, you can also measure revenue and profitability. you may discover that, while one postcard got triple the response, the postcard with the lower response rate actually generated more profits. welcome to the beautiful land of testing, tracking and measuring!
when you test as well as track, you start discovering interesting things. you’re able to measure things up against each other that you couldn’t before. with all this data, you can make far more intelligent business decisions, because the ultimate vote for whether a headline or an offer or a type of media is successful is the revenue it generates.
client dollars are really the only vote that matters when it comes to marketing decisions. it doesn’t matter if your spouse hates the look of the postcard: if it’s paying the mortgage, the spouse doesn’t get a vote!
this is why you need to be constantly testing. even if you have something that works really well for you and is bringing in a constant stream of revenue, you should always be testing it against other variations. test new headlines, test new offers, test different colors, etc. you never know what you’ll find that will significantly increase the profitability of an already successful marketing campaign.
all sorts of things can impact response rates. test, test, test, then test some more. by testing, tracking and measuring the roi of every marketing campaign through every step of the process, you are able to make more money while spending less over time. that means increased profit margins.
if you are not tracking the effectiveness of your marketing, you are simply pissing away money. i cannot be more adamant about that. track everything in your business.
poor marketing vs. lazy marketing methods
a lot of times you will either have not enough money on your hands or not enough time on your hands. now, if you do not have a lot of time on your hands, hopefully you have enough money to do marketing. there are very few marketing methods that are both poor and lazy at the same time.
poor marketing methods refers to marketing methods for which you have to put in more sweat equity than money. so, you have to put time in. you could be out posting flyers on billboards, hanging things on doorknobs, walking into other accounting firms to build referral relationships and actively writing blog posts to get free search engine traffic to your website.
in contrast, lazy marketing methods allow you to replace your time with money well spent. things like direct mail, display advertising in trade publications, pay-per-click marketing, are all examples of “lazy” marketing.
you should combine your marketing media in order to increase the effectiveness of both of them together. by combining poor and lazy marketing methods, you get a much better marketing mix, but you’ll need to evaluate your target market and compare it to your own time and money resources in order to choose your own marketing media.