Cost Of Sale
What is your cost of sale? How do you calculate your cost of sale? For us we tend to look at it from a purely marketing cost perspective and tend not to look at the wider costs of rent, hosting etc.
So if were to do a radio ad campaign that would be spread amongst the sales we achieved through the campaign. The trouble with traditional media is that it cane be very difficult to work out what you are paying for. I know; I used to sell newspaper advertising in the late 80s.
In the case of radio, are you buying active or passive listeners? What time of day are you buying? What is the range of the broadcast? How many of those actually have any interest at all, in what you are interuppting them for?
We don’t do any offline advertising. In fact we don’t pay for any advertising. No Yellow Pages, no Facebook ads, no Google Adwords. Yet our business has grown 300% in the last year.
Primarily we rely on SEO & Social networking for business. They work for us 24 hours a day and we do nothing. Apart from participating in the online discussion. Which is our business anyway. That doesn’t mean our lead acquisition or sales cost nothing. We have to take into account how much time we spend on this site, how much time we’re on Twitter, software etc.
For some clients we send them a report that shows exactly what they are paying us vs how many sales our activities are generating. We then show them the cost of those sales or the cost of the lead acquistion.
Now more than ever, every business needs to establish exactly what is an acceptable cost of sale. The mortgage industry will pay up to $300 for a qualified lead. What are you prepared to pay?
We are begining to do more performance based SEO, which basically means our remuneration is tied to our success. To do this as a win win though, the product has to have enough margin & potential volume of sales. We have had some clients opt for a flat rate once they realise their margins will be a lot healthier by not paying commissions.
Jim’s been here for a while, you know who he is.
