Flushing Cash Down the Toilet

by Tim Francis on January 17, 2012

Does this ever happen in your business?

Someone calls in with a few questions about a product they saw on your website, or maybe they’re responding to one of your ads.  After a few questions, the prospective customer says: “Thanks for your help, I’m not ready to buy, but thanks for the info.”

You hang up and think “Oh, they weren’t ready to buy.  Too bad – hopefully we get the next one.”

Do you realize you’re literally flushing cash down the toilet every time you respond this way?

I’m serious – you might as well take a $20 bill, rip it into tiny pieces, drop it in the toilet then flush, flush, flush…. watch the greenback bibblets swirl round ‘n round, then disappear down into toilet neverland…

This is what I mean:

Take all the time and money you spend on marketing and advertising.  And I don’t just mean ad spend; I also mean the graphic design costs, web design fees, the time your people spend answering the phone, time you spend talking to the ad rep, everything…. it all counts, and it all adds up quickly.

Next, let’s find out what it costs to make the phone ring each time.  Divide your total cost (from above) by the number of phone, email, walk-in inquiries you get every year… this is your “cost per inquiry”.

You might discover this is $1.36/inquiry, $6/inquiry, $20/inquiry, or more.

So if you aren’t doing SOMETHING to capture curious people into your database (for further friendly follow-up and value-added marketing towards a future sale), you are throwing away money every single time.

What do I mean by “capture people into your database”…?

Offer something compelling when they call / write / walk in.

For example:

  • Restaurant: “Before you hang up, would you like a free meal at our restaurant on your Birthday, just for joining our free Birthday Club?”
  • Retail Hat Store: “Curious to know if you would like a free Hat Care Kit from us?  Includes 3 instructional videos on how to take care of your hat, as well as a $10 gift certificate for your next hat purchase from us.”
  • Clinical Hypnotherapist: “Would you like a free copy of my eBook called ‘Secrets of Slim: The Subconscious Key to Finally Losing Those Last 10 Pounds Forever’…?”

You might be thinking: “Oh, I’ve seen those kinds of offers before.  I would never sign up for something like that.”

Great.  That’s you. And if you’re the only one that buys from you, then so be it.

Personally, I prefer to let prospective customers guide my decisions – you know, the people actually paying for the stuff I’m selling.  Let people vote with their credit cards and contact info – what I call the “Democracy of Capitalism”.

A real-life example:

I was working with a truck driver training company.  They sold classes you could take to learn how to drive a big rig truck, as well as related courses on government regulations, securing your load properly, dealing with dangerous loads, and others.

After an 80-20 Analysis, we realized that the vast majority of their customers/students entered by taking one specific course.

So I asked my client if they could provide a sample exam for that course, and if it would be okay to offer this sample exam for free on their website in exchange for peoples’ name and email address.

The result?  Immediately – and I mean FROM DAY ONE – my client started adding 1.4 new leads per day to their database through this online offer.  That’s 511 new leads per year, just for putting an offer on their website, no extra advertising.

But it gets better – I then suggested that we use Google Adwords to advertise online and get more people to their website seeing this offer.  I setup the account for them, and almost instantly signups for the free exam doubled to 2.79 leads per day.  It’s been 4 months now, and they are on-track to add 1,018 new leads to their database within a year, possibly more if we go in and optimize the ad campaigns even more.

Nice.

Consider these questions for your own business:

  1. How much are you spending on marketing and advertising every year?  (Remember that your time counts too.  To figure out the cost of your time, take your annual salary and divide by hours you’ve invested to your business – that’s your hourly rate.  Multiply this by your time invested in sales and marketing.)
  2. How many inquiries do you get every year?
  3. Divide #1 / #2 to get your “cost per inquiry”.
  4. Figure out what you could offer that would be compelling and profitable.  Remember that information is always free – what could you package into an eBook, audio program, video series?  If you do information, be careful about what you call it – like the headline of an ad or website, the name of it will almost always be the difference-maker.

Obviously you won’t get a 100% opt-in rate.  In some industries, markets, and situations 2% is considered good.

But if you got even a few opt-ins per month, and they turn into sales down the road that otherwise you would have missed out on, I betcha this whole thing pays for itself many, many times over.

Hope that helps,

Tim

P.S. You will likely use software such as Aweber or Infusionsoft to manage the names and email addresses, as well as delivery of your info-offer.  Once someone has opted-in, you want to periodically send them more info over time to stay in touch.

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