Maths: Who needs it?

As a marketing guy through and through, I think the Irish emphasis on science and mathematics is completely overstated. Make that completely overstated if want to run a business. To be honest, I would much rather be doing something that involved some creative thinking. However, the basics of any business are the numbers. Unfortunately, the typical accountants view of the world is de rigueur, but these are about the past, and of little value in making good day-to-day sales and marketing decisions for you business. P+L, cashflow and balance sheets are for bankers, but do not reflect your most important numbers.

Here are the real numbers that are important for all businesses:

Cost per lead: This is the the cost of getting a customer to say ‘I’m interested in buying your stuff’. If you advertise in the Golden Pages at a cost of €1000, and 100 people call or go to your website, then the cost per lead of that channel is €100.

Cost per sale:  The cost per sale reflects all the costs of getting a prospect on the path to buying from you. This is the number you must know, as it reflects all the costs of putting a prospect on the path and converting him to be your customer.

Average transaction Value (ATV): knowing your ATV will determine the maximum allowable cost of acquiring a customer, before you even spent any money.

Customer Value: This is a case of knowing your ABC: what is the value of your customers broken into segments: A level customers, B level customers and C level customers. You can then communicate with them in different ways, enabling you to choose different type of media and methods

Lifetime Customer Value (LTV): This a biggie, and to be honest, there is a bunch of claptrap talked about it.. On the one side, there are plenty of companies talking about it, and saying they believe it is important, and investing in CRM systems to do so – but not doing a thing relevant to customers. All mobile phone operators in Ireland leap to mind, for instance. Similarly, there are those who are actually doing it properly, without spending a cent. Your typical old Irish corner shop did it better than any multi-national company can ever do.

If none of the above strike a chord, then get working on knowing these key number straightaway. And, if you hear yourself saying ‘but my business is different’, then you definitely need to know them. Whether you make cupcakes, widgets or flog yourself as a Facebook guru, all the above still apply.


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