Saturday, August 6, 2011
Is a Specific Promotion Worth the Spend?
When a marketing or promotional opportunity appears, the question is... Is it worth using any of your precious budget or time?
Normally, the question of ROI comes up: Will we get our money back or 4x to 8x our money back? If the answer is "yes", that is, you can guarantee that your spend will return 4x or 8x the investment, then stop here. If you are 100% sure that putting $1,000 down will return $4-8,000 in the next, say, 12 months, there is zero reason to hold off. In fact, please contact me and I'll pay half ... assuming you will give me half or even a quarter of the return.
Since sure things are rare in marketing, read on...
How to quickly judge if a marketing opportunity is worth pursuing:
1) Ignore ROI. Yes, I said it, ignore ROI. Recall, you are guessing, not guaranteeing. If you can guarantee it, then read above.
2) Avoid any "Act now or forever lose the opportunity" offers. One of my clients, long ago, said, "I do not regret any missed opportunities that turned out well. I regret the ones I took that turned out poorly." There are opportunities, like interviews or speaking presentations, that time-bomb quickly ... so assess them quickly. But do not say "yes" only because they go away soon. Anyway, if a rep says you need to let them know about a 50% off deal by Friday or you lose the space, and this wasn't already in your plans, then nine times out of ten you are better off shrugging and pressing delete on the voice- or e-mail.
3) Determine the 'all in' cost, that is, money and time. No need to figure out the hourly or billing rates of the people involved, simply make a list including dollars and people hours. I.e. inventory your investment.
4) Ask yourself the following question: Is this the best possible use of this investment? Make a list of what else you could do and rank them. If the opportunity in question rises to the top, then go for it. If not, then don't do it ... regardless if you will actually move forward with the better option(s).
A Partner at an accounting firm and I did this assessment the other day and he quickly listed out two or three things he would rather do "...if we had this money and time allocated." End of discussion about the so-called opportunity that instigated the assessment. We had better uses for the time and money and, while we may or may not move forward with any of those, why would we move forward with the lesser option ... regardless of estimated ROI?
In short: Judge "act now" opportunities not on whether or not they are a good buy, but if you could do better.