Although every business owner knows the importance of marketing their business, NOT everyone knows the importance of having a plan. Furthermore, the few who know the importance of having a plan do NOT take the pains to ensure they have the right plan. This creates several problems for any business. Here are a few:
1. Poorer Conversion Rates Your conversion rates are dependent on doing a number of things right. High conversion rates are products of painstaking analysis and tracking: Traffic sources are tracked. Different messages are tracked. Web pages are tracked. Furthermore, even elements of each page are tracked to determine which converts best.
However, a poor plan makes a lot of assumptions. Businesses don’t grow based on assumptions. They do based on what works in the real world. The only way what works can be factored in correctly is by having the right strategy in place.
2. Poor ROI If a particular business has poor conversions then it means that their return on investment would be poor (At least poorer than a similar business that has a better conversion rate). A good marketing plan looks at the advertising budget available and picks out the most effective strategies for getting the biggest returns.
And because plans that work in one industry don’t actually translate to effective plans in another unrelated industry, every business has to devote some time and resources into developing the right marketing plan (and fine-tuning it based on business intelligence they gather over time).
3. Lower Customer Life Time Value A good marketing plan maximizes the value a business gets from each customer. The amount of money that is made from each customer depends on how well the entire marketing plan is designed to sell different products and services to that particular customer. This is why smart businesses segment their customers based on their unique preferences. This takes some serious planning but the rewards make it worthwhile.
4. Reduces Ability To Compete The lower the conversion rate a business enjoys, the lower the ROI, the lower the customer lifetime value, the weaker a business becomes in the face of competition. Take bidding on Adwords as an example.
If Business A has a conversion rate of 10% on 5,000 clicks while Business B has a conversion rate of 8% on the same number of clicks then Business A can bid slightly higher and so get more visitors than Business B. But it gets worse.
Let us assume Business A has developed a plan that helps it make $2000 over the lifetime of each customer while Business B only does $800. Then they’ll be doing about $600,000 on every 5,000 clicks while Business B makes only $320,000! With this advantage, they can hire better hands, develop better products, reduce their margin per product/service, build goodwill in the community by sponsoring more events, etc. then it’s just a matter of time before Business A drives B out of the market.
The importance of having a detailed and thorough marketing plan is crucial if you want your business the thrive.
