One of the key characteristics of a cohesive marketing strategy for your tax practice is to track and measure every aspect of your marketing, like we mentioned last week. Knowing what you’re spending your money on isn’t enough: You must know what dollars are bringing in what results.
Not only must you track the results of your spending, but you must track transactional elements of your marketing. Here are a number of important marketing metrics for you to be tracking.
Cost Per X People Reached: In the TV, radio, and print worlds, this is often referenced by advertising sales reps as CPM: Cost Per Thousand people reached. It provides an apples-to-apples method of comparing various media. However, do not get caught up into thinking that the lowest CPM is the winner. Just because one media is cheaper on a CPM basis, doesn’t mean it’s worth using if it’s not otherwise your ideal target market.
Cost Per Lead: Let’s say you spend $5,000 on a direct mail campaign, and send 10,000 prospecting letters for that money. From this, let’s say you get 200 phone calls, for a 2% response rate (which is an excellent response rate for direct mail, by the way). Spreading the cost of the campaign across the 200 phone calls, you invested $25 to acquire each lead. If only half those leads were qualified prospects, your cost is $50 per prospect. Knowing these numbers for every marketing effort you employ is one of the most important things you can know in your entire business.
Cost To Acquire A Client: For every individual client you have, you should know how much you had to invest in order to attract that client. In other words, you should be able to know every dime that you spent on direct mail to a new client, their share of your seminar costs, the pro rata magazine ad cost of getting their first phone call, etc.
Lifetime Customer Value: Too many firms look at a client from a TRANSACTIONAL standpoint. In other words, how much is John spending today? Instead, you should know the lifetime value of a customer: How much are they going to spend with you over the course of a year…five years…thirty years…The value of referrals they provide you, etc. This is often a foreign way of looking at your clients, but is a profound and necessary paradigm shift to make in order to succeed long term.
Conversion Ratios: You should know your conversion ratio through every step of your marketing and sales process. You should know what percentage of people that call you book an appointment. You should know your ratio of seminar or webinar attendees to newsletter signups. You should know what percentage of people that order a free report then come in for a consultation. You should then know what percentage of consultations turns into entry level clients. You should then know what percentage of entry level clients (for example, tax return preparation clients) become other type of clients, such as wealth management, payroll, QuickBooks advising, etc.
These are just some of the numbers you should be tracking. Create yourself a spreadsheet and start tracking these metrics immediately, as these are the most basic things to track in order to begin making intelligent marketing decisions.