Advertising, Sales, and Measuring What Matters
For anyone serious about the sales side of this business, advertising is a primary driver of gross sales revenue. Ask yourself honestly: Are you satisfied with your current revenue stream? Is your profit margin growing—or shrinking? Are your sales results delightful or dismal?
If your gross sales are stagnant, rising costs of goods and operating expenses will eventually overrun you. This is why it is critical to consistently monitor three things:
• Gross sales
• Operating expenses
• What actually ends up in your pocket after everything is paid
Advertising is not optional for a healthy business—it is an investment. But above all else, you must have a system in place to monitor and measure your advertising efforts and the money you are spending on them.
If you are not tracking the labor you expend and the advertising dollars you spend, then you truly do not know what is happening in your business—especially if sales are flat. In that case, you are likely wasting both time and money.
Be careful not to fall into the trap of handing over advertising dollars to someone selling “advertising services” who cannot provide tangible, measurable results. This is a reminder to return to the basics: keep it simple, get the biggest bang for your buck, and understand exactly what your advertising dollars are buying you. Advertising directly affects your profit margin—ignore that fact at your own risk.
At its core, one of the most basic and time-tested advertising techniques—used by sole proprietors and Fortune 500 companies alike—is coupons combined with tracking and measurement.
Before you produce any advertising or promotional materials, you must first build the mechanics that provide feedback. Think it through. You need a system that produces measurable results—results you can compare directly against the time and money invested in the campaign.
Your labor matters just as much as your cash. Ask yourself this: would you continue spending two hours of your time to increase profits by $4.00? That works out to $2 an hour. You could earn more flipping burgers. Time is an expense, whether you acknowledge it or not.
Now consider a coupon campaign. A coupon reaches a potential customer. That customer brings the coupon into your business, presents it at purchase, and you track the sale tied to that coupon. From there, you calculate the profit generated by those sales and compare it against the advertising cost and labor invested.
If the profit exceeds the expense, you are on the right track. If the expenses outweigh the profit, you must change course—quickly.
Tracking and measurement can be simple or complex, depending on your business model. It may involve manual tracking by sales staff, specially programmed POS systems, or fully automated accounting and bookkeeping software. The method is less important than the principle.
The point is simple: Advertise—and measure the results. Know whether your advertising is making you money or costing you money. Then adapt accordingly, so your advertising dollars work for your business instead of bleeding it dry.
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