How's your return on investment? Does that seem like a funny question coming from me rather than, say, Kristine McKinley? But you already know that keeping your business running smoothly requires organization. For example:
--If you organize your information, then you're not constantly searching your desk (or computer desktop) for notes. Once organized, you will sound much more professional on the phone and in person, embodying the sense of confidence your prospects and clients need to help them decide to hire you or renew with you. Organizing brings in revenue!
--If you've learned to sort like with like and have arranged your printed marketing materials in one "home", you'll know at a glance whether you need to order more before VistaPrint has its next sale or before your next trade show, or if it's safe to wait a few months before reordering. Organizing controls expenses!
--If you've mapped out all of your appointments and obligations to yourself (like continuing education, marketing, administrative work, "bodycare" and self-nurturing) in your calendar so you have no conflicts or dropped events, you'll sleep better at night and deal with the unexpected with a greater sense of aplomb. Organizing yields mental acuity!
Thus, it's no great jump to see how organizing your referral and marketing data (and the associated financial information) can impact your return-on-investment.
How do you answer the following questions?
1) How much are you spending on marketing each year?
Do you have a marketing plan that includes a price breakdown? Does your accounting software (or your pen and ink journals and logs) make it easy for you to pull up what you've spent on marketing in any given quarter? You've got exactly three months until your 2007 taxes are due – you do NOT want to be calculating your marketing/advertising expenses on April 14th.
So, if you don't already have a spreadsheet detailing each marketing activity (print, postage, direct mail, web hosting, web design, blog costs, podcasting costs, toll-free number, Yellow Page/Yellow Book listing, Ryze.com premium memberships, etc.), now is the time to start.
Don't depend on a shoebox full of receipts and the angelic patience of your accountant. Even if it requires that you clear your dining room table to start making piles of receipts (which you can then transcribe into your spreadsheets or accounting software), start today (and not April 12th) to get a sense of where the marketing money has been going.
2) Has your client load increased over the past year?
Wait, before you answer that -- are you sure? Could your number of new clients be balanced by those who have "graduated"? Is it possible you're seeing the same clients more times rather than a larger total number of clients? Depending on your profession, it may be more convenient for you to have more ongoing clients than new ones…but it's still essential to have the pipeline full.
If you haven't already created one, build a spreadsheet or database of your clients with all their contact information, and have a column indicating their first appointment date. Then, you can easily sort by date and see how many "new" clients you've taken on in any given year or quarter, vs. how many are ongoing.
Repeat clients are golden, but if you're too heavy on long-timers, recognize how significant their loss might be to your bottom line. Organizing your records to analyze your client load and the balance of new and older clients will help you determine your marketing strategies.
3) Has your revenue increased or decreased over the past year?
That should be an easy answer, but depending on how much formal bookkeeping you do, you may not be able to tell the difference between a dramatic increase in revenue combined with an associated increase in expenses vs. a generally flat year.
Have your rates changed, and have they kept pace with your expenses? Some years, you may find that your rates have increased so that your overall revenue has increased, without a dramatic increase in clientele. This can create a false sense of security, as each client lost (due to attrition, "graduation" or other issues) will take a bigger chunk out of your total revenue. You can't pinpoint your marketing without knowing your financial standing in general.
4) Do you know where your clients find you?
Do you know, with certainty, if you're effectively apportioning marketing funds? Or are you guessing based on what feels right?
For example, many of my marketing methods cost very little. I barter the design work for my web site, my domain name is an ongoing gift purchase and my domain hosting is inexpensive. However, even if I had to pay for my own domain registration, pay cash for design and increase my hosting costs, it would be worth it because 80% or more of my annual business comes from my web site.
Conversely, for the last few years, I have participated in a few charitable auctions where I donated a gift certificate for four hours of my services. While my own clients almost always have me back for "repeat business", none of the winners have engaged my services again, and none of my other prospects have found me through the marketing at these auctions. There's a goodwill value, and a karmic value, but not a great marketing value in these auctions. Monthly and quarterly reviews of each marketing activity and marketing path help me clarify these issues. I may stick with them for good karma, but if so, I'll be doing it from a position of wisdom and strength.
And how do I KNOW where my clients find me? Because I ask each and every one at the start of any first email or verbal conversation! Then, I create a spreadsheet for referral tracking purposes so that I know from where each referral comes, in order to determine which marketing methods have yielded the best return on investment.
Don't just think about total costs, but cost per secured client. I may pay about $200 a year for a Yellow Pages listing, but just one client a year will bring me a profit. I may begrudge them their payment each month, but I know (intellectually) I'm paying that small amount out of profits. An unpaid speaking engagement may not yield any revenue upfront, and may cost me the equivalent value of 10 or more hours of writing and planning (not even counting the actual presentation), but the prospects yielded can yield a huge return on investment. Other marketing efforts (like this coming week's TV appearance) may bring glory and awareness, but no clients (at least not directly).
The trick is knowing from where your prospects come, and organizing this data takes very little effort:
a) Ask how they find you
b) Chart the responses
For example, I've created this fun faux chart to show you how I track my referred prospects (and if my meager GoogleDocs skills work, you may even giggle):
http://spreadsheets.google.com/pub?key=pCPxMlL-u6PPGcnKI8JmcHQ&output=html
Each time you talk to a prospect, take just a few seconds to log the information in a spreadsheet to track the flow. If you already have a spreadsheet/database for logging client information, so much the better: just add a column for "how referred" and you're done. A few more fancy macros and links (hey, computer people!?) may even let your spreadsheet auto-update to determine how much revenue comes from any given client, to let you determine how much revenue comes from each marketing effort!
I am by no means an accountant (and even if I were, I still would not be YOUR accountant). But it's clear that knowing where your money is coming from, and which marketing efforts bring that money in, is key to determining your return-on-investment. Our expert Kristine (or your own financial expert) can ably tell you how to analyze the financial information, but until you gather and sort the data, your R-O-I is your M-Y-S-T-E-R-Y.
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Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
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