How the letter P changed my life…
“The best laid schemes o’ mice an’ men / Gang aft a-gley (often go awry)” – Robert Burns
Every successful person I know has at one point had a strong mentor in their life. Someone to help guide and mold their career, a sounding board for problems, a wise father figure when it comes to professional development. If you listen to stories about mentorship, you’ll also find that a good mentor tends to also be a little bit crazy… what successful person isn’t just a little bit quirky?
One of the strongest mentors in my career is just that… a little bit crazy. Since he is most likely reading this e-letter I will refrain from sharing too many stories in this space, but next time we’re shoulder to shoulder in a pub, please remind me to share.
One of the things my mentor is known for is boiling down chaos into simplicity. It really is a gift. In the midst of a problem what is the one thing we want to do? He would say, “TTFO”… which stands for “Take The F(ing) Order”. Seriously… server fails, phones go down, global internet outage… what is the one thing we can do to help the customer and the business at the same time… Take Their Order!
My mentor will also tell you about the ‘7 P’s’. Without the ‘7 P’s’, all is destined to fail.
Got it? Makes perfect sense and it’s absolutely true. As marketers we need to embrace failure. Failure is ok as long as we planned for an outcome and the outcome was not what we expected… we learned from that failure. Planning inherently requires goal setting… in order to plan a roadmap there is always the end destination. Which is what I want to discuss today.
As direct response marketers, we need goals to understand the meaning of success. In an industry where testing should be constantly on our minds, how can we test if we don’t have any figures to benchmark against? How can we set goals if we don’t know where we are right now? We can’t, plain and simple.
Over the years, I’ve noticed a lot of goal setting focused on the short-term growth of the business. Short-term goals are fine, but they should be paired with the long-term goals and they need to be absolutely aligned with the long-term direction of the business.
Let me explain by example. Many years ago I worked with a business that had been struggling for multiple years and we just couldn’t figure out the problem. Finally, after pulling our hair out for months (and yes, I am bald), we dug into the source of new leads coming onto the list. The majority of new leads were coming from Google Adwords. But over the span of 3 years the composition shifted from 90% U.S. & Canada / 10% International to 90% International / 10% U.S. and Canada. The list was unresponsive because the majority of the leads coming onto the list were not in the target market for the publication.
Let’s dig in a bit more. Goals were set – the marketer had a goal of bringing on X number of names at a predefined cost per acquisition (CPA). Goals were met – but was it a success? No… there was no long-term goal associated with the acquisition goal. That long-term goal should have been, “Do long term metrics of these names meet or exceed my historical benchmarks from this channel?” That is: 1) Do the leads convert to customers at an acceptable rate, 2) Do they refund at a higher rate & 3) Is the lifetime value (LTV) in line with other channels?
More latestly I had a call with another, fairly new, business that was diversifying their lead generation channels and found great success with a new source. This source was bringing in hundreds of thousands of names at a fraction of the cost of other sources. The ROI looked good; it doesn’t take many sales to have a positive ROI when the CPA is next to nothing. On the surface this looks good right? Wrong.
The marketer casts a very wide net and ultimately found a few customers among hundreds of thousands of new leads. Hundreds of thousands of new – unengaged – leads. While the CPA was quite low, so was the revenue per acquisition. A fraction of what they were seeing from other channels. It’s too early to see how the paid acquisitions will trend against other sources, but I’d wager they will fall short.
There are a few long-term effects of this that act like a cancer on the business:
1. The overall list isn’t responsive. It’s impossible to test new copy, the lifeblood of our business.
2. Deliverability will suffer. With the big three web based ISPs looking at engagement as a deliverability metric, more and more email will go into the spam folder.
3. Muddy reporting. The low conversion rates and revenue per name from this channel will make it extremely difficult to define success for the next few years. This channel will need to be excluded entirely to see the real historical benchmarks for the file.
The fatal mistake here was something we all have experienced… the thrill of quantity over quality. Not all leads are made the same… do yourself a favor and focus on quality.
Before I sign off for the day, I’ll also mention, goals need to tie back to something real. A goal of 100,000 new unique visitors to the website doesn’t mean anything unless you can project out what that means to the business. For example: 100,000 new unique visitors should convert about 2,000 people to e-letter readers. Out of the 2,000 e-letter readers, 100 will convert to paid readers. Those 100 paid readers will refund at a rate of 15%. Those 85 paid customers will have an LTV of $400. The numbers here are for example only; please consult with the key members of your business to get your actual historical benchmarks.
I hope today’s issue has shed a bit of light on how you, as a marketer, should be planning and setting goals for your business. Your goals need to look at the short-term and long-term. They can’t exist in isolation, and they should be uncomfortable. If marketing is easy, you aren’t doing it correctly.
I would encourage you to do the following after you read todays issue:
1. Write down your goals. They aren’t real unless you write them down… seriously.
2. Share your goals with your team members and your supervisor to make sure they are in line with the direction of your business.
3. Revisit your goals monthly.
I hope all of the Americans reading this e-letter have a happy, and safe, fourth of July week.
As always, if you need help defining your business goals, get in touch with me at email@example.com. I’d be happy to discuss.
All the best,
Managing Director, AIM