Know Your Numbers
Business owners and directors tend to be driven by one thing above all else, and that’s the bottom line. It never ceases to amaze me, therefore, how few actually understand the commercials of their business.
How many of these questions can you answer:
- What is your conversion rate from lead to a sale?
- What is the average profit value per job?
- How likely is it that the customer will return to you?
- What is the referral rate?
Without knowing the answers to these questions, you cannot possibly understand the value of a lead, and consequently, you will either end up spending far too much or, more likely, far too little.
For example, if you know that a typical customer for your fabrication company is worth £2000 in revenue and you’re working to a £25% profit margin, then that means the sale is worth £500.
However, if your conversion rate is only 20% then the value of the lead is worth £100. Or in other words, you can spend up to £99.99 generating the lead but not a penny more. Once the numbers are in place you can then apply this logic to all channels – PPC, social media advertising, radio advertising, etc…
This is how new brands hit a market and scale rapidly and profitably. It’s because they know their numbers.
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