This company was about to spend $21K on marketing to hit $100K in revenue. The problem was never their lead count. It was a 65% booking rate and a 15% cancellation rate quietly bleeding them. We fixed the call center numbers and their marketing spend dropped $6,000 overnight. Your KPIs tell you what to spend on marketing. Most owners have it backwards. In the comments below is the same calculator from this breakdown, for free.
@officialchadpetermanTranscript
I want to tell you about a story about a company that we were helping that didn't know why they couldn't hit their budget. Do we need to spend more money on marketing? Do I need more leads? What is it? They didn't know where to go. So the cool part is, at Can't Stop the Growth, we built a calculator for all our companies so that they can plug in their own individual numbers and understand where their operational KPIs are off. So let me show you this example and what we did with this company. So $100,000 was the revenue goal for that month. Their booking rate was 65%, their cancellation rate was 15, they had a pretty good conversion rate at 70, and their average ticket was pretty good at $1200. What that equated to was their marketing spend based on their operational KPIs was going to have to be north of 20%. That's not good at all, and that's not a sign of a healthy company. They were going to have to spend $21,000 in order to generate $100,000 of revenue. That math, don't math. Here's what we did. We looked at operational KPIs that probably a lot of you either don't know or don't pay that close attention to. Those two are booking rate in your call center and cancellation rate. Cancellation rate is the one that often people overlook. They think they have a booking rate of 90%, but they've got a cancellation rate of 20. Well your actual booking rate is 70%. This particular company, their booking rate was 65%. What we did is work with their call center to hopefully increase that booking rate and lower that cancellation rate. So when we took the booking rate up to 80%, and we dropped the cancellation rate by just 5% down to 10, all of a sudden their marketing spend starts to get in line. They saved $6,000, were able to hit their budget, but now they have a clear path to what they need to improve. That 80% still needs to improve. That cancellation rate still could go down a little bit, and oh by the way, they could start working with their technicians as well in the field to improve that conversion rate and average ticket. Let's look at if we just worked in the field and increased our average ticket by $300. All of a sudden our marketing spend continues to drop. So when you're looking at your business and you're wondering what should I spend on marketing, what's the right percentage? A lot of people will toss out percentages. What I will tell you is to go look at your operational KPIs and they will tell you what you should spend in marketing. If you're spending 20% and your operational KPIs are off, that's probably not a good thing. The great thing is, is there's help out there. At Can't Stop the Growth, we help companies all the time correct their operational KPIs so that they can run a healthy company. If you want access to our calculator, comment growth and we'll send over this calculator to you.
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