What is the bottom line of your business?
The question: Do you really know your business bottom line? Your net Income? Well let’s see..
Well it states that many marketers believe in improving the business bottomline by focusing on the topline growth of the business.
What is it meant by the topline growth?
By topline growth, increasing the website traffic, increasing sales, brand mentions, etc. But this is sub-optimal way of improving the business bottomline.
This is because….
Business bottomline is more about controlling the cost than increasing traffic and sales. To improve your business bottomline, you should really be focusing on the bottomline growth.
The bottomline growth includes improvement in any metric which involves cost like:
- Gross Profit
- Return on Investment
- Return on Advertising Spend
- Cost Per Acquisition
When you optimize your campaigns with the focus on bottomline growth, you don’t think about spending more to acquire traffic. You may think of spending less on acquiring traffic and focus more on getting the most from your existing traffic.
Focusing on the Top Line Growth is hurting your business
The number 1 way of improving the business bottomline is to throw more traffic to the website.
As you acquire more traffic, you tend to spend more on traffic acquisition. Since the focus is on acquiring traffic, the cost per acquisition often plays a second fiddle. Your organic traffic is as expensive as traffic from other sources.
The cost of acquiring new traffic will always increase. It is not going to decrease.
So if you keep focusing on the top line growth then at some point your cost per acquisition will become so high that you may no longer be profitable in your acquisition strategy.
Here are 7 methods to control the marketing cost and improve the bottomline:
- Method #1: Focus on acquiring only the best customers through your campaigns.
- Method #2: Stop spending money on acquiring low value customers.
- Method #3: Create a well-defined marketing strategy.
- Method #4: Run conversion driven campaigns instead of traffic driven campaigns.
- Method #5: Test your assumptions, fail early, fail fast.
- Method #6: Calculate the ROI of everything you do.
- Method #7: Hire an expert.
- Focus on acquiring only the best customers through your campaigns
Your best customers are your most profitable customers. If you don’t know your best customers yet then get to know them and establish a good customer relationship with them.
- Stop spending money on acquiring low value customers
Low value customers are not your most profitable customers but they do can generate sales and collectively they can generate lot of sales. However you need to keep the cost of acquiring them in mind.
They are known as low value customers for a reason.
- They are expensive to acquire.
- They buy cheapest items on your website and happily jump to your competitor’s website just to get a better deal.
- They are not going to make lot of purchases, they are not going to visit your website often and they won’t stick with you for long.
If you invest in acquiring best customers, you will get customers who often buy high priced items on your website and stick with you for a long time. Focus on acquiring more of the best customers and gradually get rid of majority of your low value customers.
3. Create a well-defined marketing strategy
A strategy is the one which has been put on the piece of a paper.
If it is not on the piece of a paper, if it is not in black and white then it is just some random set of ideas and not a strategy.
If you are really serious about creating a marketing strategy, you will make efforts to write it down somewhere and share it with others.
When you have a well-defined marketing strategy in place, you will know where the money should be spent to get the maximum possible ROI. In this way you avoid spending your money randomly and/or on acquiring low value customers.
4. Run conversion driven campaigns instead of traffic driven campaigns.
How much traffic do you really need? Is there any upper limit?
To actually be confident and aiming that high is not bad at all for your business bottomline. You aim for the moon, even if you miss, you’ll still land up on the roof top. But what that really matters here is your change in focus from simply throwing more traffic to the website to actually converting the majority of existing traffic. You don’t need more traffic, you need more conversions.
- Test your assumptions, fail early, fail fast
Both marketers and business owners make lot of assumptions about their campaigns, products and target audience. But very few take the pain of actually testing their assumptions. These assumptions can be something like creating the best user experience or knowing your target audience. If you are not really sure about your target audience then you are most likely to acquire low value customers and end up spending more on customers’ acquisition.
If you don’t have any solid data to back up your claim then it is just an assumption.
Failing early in testing your assumptions and failing fast will help you not to fail often later on. Failing often is just too expensive in any business and can even put you out of business especially if you are a small business.
6. Calculate the ROI of everything you do
ROI is more important metric than conversion rate simply because it takes ‘COST’ into account. As long as you take ‘Cost’ into account, you can’t go wrong with improving your business bottomline. Calculate ‘cost per acquisition’ for all of your marketing campaigns whether it is SEO, PPC, Email, Social Media or Display. Even calculate ROI of all of your meetings, business travel and lunches.
- Hire an Expert
There is always an opportunity cost when you choose to do things yourself in which you are not an expert or when you hire someone who is not an expert.
Why you should not end up with mediocre campaigns and mediocre results or face failure if you choose to do everything yourself or make a hiring mistake?
This opportunity cost is often the difference between success and failure. A business owner thinks that this is saving money by not hiring an expert. But is actually losing on all those potential sales which would have got only through the expert.
Hiring an expert may not be profitable at first but in the long run, but it is the best thing for you to do for your business. Not only you will recover your entire hiring cost sooner or later, but you will also make lot of money on top of that and you will continue to do so for a long period of time.
But all of this can happen only when you first understand that you can’t be an expert in everything you can do and that you need someone who is really an expert in his field.
Please know the bottom line of your business and establish relations with your audience!!!
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