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Rule #1: Increase Your Profits Measure your Results

Rule #1: Increase Your Profits Measure your Results

I hate accounting – but I love tracking and measuring the responses to my ads.

From the day I started my businesses, I have kept detailed results of every ad and promotion I have run.

When a friend saw my tracking system, he claimed I was a frustrated accountant. (Since he was an accountant, I took it as a compliment.)

The only difference today is that they’re kept by computer rather than by hand – and they’re more detailed.

A simple start to tell whether your ad made a profit, just compare the profit on your sales from the ad (gross revenue, less the cost of the product and marginal costs like credit card commissions, postage, and so forth) to the cost of running the ad (including an allocation of the costs of creating and laying out the ad).

(You may also want to include the cost of the product or service. I’ll discuss this under Rule #3.)

By doing so, you can compare returns from different ads. As an example, I once ran an ad for the same product, a year apart. They both ran in the same publication. However, the second did better (372% of break-even compared to 286%) … even though the second insertion cost more than the first.

And since I’d run the first ad many times in that year, you would expect the second ad to do worse.

It didn’t, however, and here’s why.

One reason is the position of the first ad was “run of paper” which meant the ad manager could put it anywhere it fit.

The second ad was on the first page of the Business News section of the newspaper.

A far better position (see rule #5). But without a premium or loading for that position (rule #7).

When you are over 100% of break-even, what happens to your advertising budget? It becomes unlimited (with that offer in that medium, of course).

When your ad is aimed to generate inquiries, you need to calculate two key indicators:

• The cost per inquiry (number of inquirers divided by the cost of the ad); and,
• The “conversion rate” (the percentage of inquiries that buy) plus, of course, the ultimate profit.


Once you know your conversion rate, you can project the profitability of your ad simply from the number of enquiries you have received.

For example, let’s say your profit per sale is $25. If your cost-per-inquiry is $5, your conversion rate must be 20% to break even. But if your average conversion rate is only 10%, you will know that this ad, in this publication, isn’t going to work.

But if your new ad produces a cost-per-inquiry of only $1, the ultimate profit-per-inquiry (with the same 10% conversion rate) will be $2.50, and you will know you will want to run this ad again.

If this is new to you, you will be wondering how to trace a specific sale to a specific ad. The answer is in my next article, titled, "Rule #2: Code Every Ad".





Rule 1 Increase Your Profits Measure your Results - To learn more about this author, visit Brad Sugars's Website.

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Kim Castle
With nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website

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Casey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website

Leanne Hoagland-Smith
Are your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website

George Ludwig
George Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website

John Brennan
John Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website


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Brad Sugars
(Visit Brad's Website) You'll love reading the articles here by Brad Sugars, his advice is real world and comes from having literally founded the business coaching industry in 1993. Brad is the Founder and CEO of ActionCOACH, the World's #1 Business Coaching Company. Having Coached literally tens of thousands of business owners and executives you'll find ActionCOACH and Brad Sugars will fill your head with strategies and ideas on how you can make your business work for you.

Brad Sugars is a Gold author on EvanCarmichael.com
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