7 Powerful methods to Improve your Business Bottomline

Many marketers believe in improving the business bottomline by focusing on the topline growth.

By topline growth I mean, increasing the website traffic, increasing sales, brand mentions etc. But this is sub-optimal way of improving the business bottomline.

This is because

Business bottomline is more about controlling the cost than increasing traffic and sales. To improve your business bottomline, you should really be focusing on the bottomline growth.

The bottomline growth includes improvement in any metric which involves cost like:

  1. Gross Profit
  2. Return on Investment (ROI)
  3. Return on Advertising Spend (ROAS)
  4. Cost Per Acquisition

When you optimize your campaigns with the focus on bottomline growth, you don’t think about spending more to acquire traffic.

You infact think of spending less on acquiring traffic and focus more on getting the most from your existing traffic.

 

Focusing on the Top Line Growth is hurting your business

For many of us, the number 1 way of improving the business bottomline is to throw more traffic to the website.

Now here lies the problem. As you acquire more traffic, you tend to spend more on traffic acquisition. Since the focus is on acquiring traffic, the cost per acquisition often plays a second fiddle.

Nothing comes for free in this world. Your organic traffic is as expensive as traffic from other sources.

If nothing else, you are still paying some fees to your SEO consultant at the end of each month. Even if you are doing all the marketing yourself, you are still investing your time and time is money.

The cost of acquiring new traffic will always increase. It is not going to decrease.

So if you keep focusing on the top line growth then at some point your cost per acquisition will become so high that you may no longer be profitable in your acquisition strategy.

For example, would you really be profitable by spending £200 to sell a product worth £50? No.

You won’t be.

So you need to think about the ‘COST’ of acquiring a customer.

Not tomorrow or next week but RIGHT NOW.

Many marketers believe that the ‘Cost’ in not really in their control. No one seems to talk about reducing the cost.

You won’t see many articles on reducing marketing cost.

But everyone seems to have got lot of suggestions to increase the marketing cost. Do this, do that, throw money here, throw money there, someone will buy from us eventually.

Yes give me £100k and I will increase your sales 10 times, no matter how rubbish your website/product is. But don’t ask me anything about the abnormally high cost per acquisition, if you do happen to take this metric into account.

The poor ‘cost’ is not considered as a reputable metric even today as majority of marketers are still too busy in increasing website traffic and optimizing conversion rate.

Even the mighty conversion rate metric doesn’t take COST into account

Consequently our marketing goals are often like: increase the website traffic by XX % in the next 5 months and not something more prudent and practical like decrease the cost per acquisition by XX in the next 4 months.

So my question to you is, what are you doing today to decrease your cost per acquisition next month?

In the next few minutes I will show you how to control the cost and improve the business bottomline without spending any more on content development and marketing.

 

7 Methods to control the marketing cost and improve the bottomline

Method #1: Focus on acquiring only the best customers through your campaigns.

Method #2: Stop spending money on acquiring low value customers.

Method #3: Create a well defined marketing strategy.

Method #4: Run conversion driven campaigns instead of traffic driven campaigns.

Method #5: Test your assumptions, fail early, fail fast.

Method #6: Calculate the ROI of everything you do.

Method #7: Hire an expert

 

Focus on acquiring only the best customers through your campaigns

Your best customers are your most profitable customers. If you don’t know your best customers yet then get to know them ASAP.

According to Pareto Principle (also known as the 80–20 rule), 80% of your sales come from 20% of your visitors.

These 20% of your visitors are your best customers. The other 80% are your low value customers which are the main reason of your high acquisition cost. It is going to cost you a lot more to acquire these low value customers. It is going to cost you lot less to acquire the best customers.

Let us suppose that your target market is UK. So your average customer can be anywhere from UK.

Let us also suppose that after lot of analysis, you found out that people from London buy 4 times more than an average visitor to your website. They tend to spend 40% more than average per order. So people from London are your best customers.

You need more of these best customers to improve your business bottomline. So gradually start reducing your budget for acquiring low value customers from all over the UK and use that budget on acquiring more of best customers from London.

It is not really a rocket science but many marketers and business owners don’t just get it. They remain busy in acquiring low value customers because they have never made any effort to identify and target their best customers.

 

Stop spending money on acquiring low value customers

Low value customers are not your most profitable customers but they do can generate sales and collectively they can generate lot of sales. However you need to keep the cost of acquiring them in mind.

If you are spending say £49 to generate £50 in sales then is the £49 really worth the spend?

They are known as low value customers for a reason.

  • They are expensive to acquire.

  • They buy cheapest items on your website and happily jump to your competitor’s website just to get a better deal.

  • They are not going to make lot of purchases, they are not going to visit your website often and they won’t stick with you for long.

On the contrary if you invest in acquiring best customers, you will get customers who often buy high priced items on your website and stick with you for a long time.

They are going to be less expensive to acquire as there are not as many of them as low value customers.

Unless you operate on a very low profit margin (like FMCG companies) where any decrease in customers count will quickly erase the profit and result in net loss, you should not be spending money on acquiring low value customers.

Focus on acquiring more of the best customers and gradually get rid of majority of your low value customers.

 

Create a well defined marketing strategy

A strategy is the one which has been put on the piece of a paper.

If it is not on the piece of a paper, if it is not in black and white then it is just some random set of ideas and not a strategy.

If you are really serious about creating a marketing strategy, you will make efforts to write it down somewhere and share it with others.

Of Course, just writing your strategy down on a paper won’t make it “well defined”. But it is a good start.

I have a whole article just on creating a well defined marketing strategy, so I won’t repeat, what has already been said here.

Just check out this post: 6 Simple steps to Create and Analyze a Marketing Strategy

When you have a well defined marketing strategy in place, you know where the money should be spent to get the maximum possible ROI.

In this way you avoid spending your money randomly and/or on acquiring low value customers.

You know your target audience very well, you are very sure about your goals, thanks to your well defined marketing strategy.

So now every pound you spend will help you get the maximum possible return on your investment.

 

Run conversion driven campaigns instead of traffic driven campaigns.

How much traffic do you really need? Is there any upper limit?  

What is the point of getting millions of website visitors each month, if not even 1% of them convert?

Unless you are a brand new website or you get less than 1000 visitors a month and/or your conversion rate is less than 40%, getting traffic should not be your top priority.

If you can’t convert even 40% of your total visitors which is less than half of your total site visitors, then something is really wrong with your marketing campaigns and/or website.

Yes I know 40% e-commerce conversion rate can be considered very high.

But it is considered very high primarily because not many marketer even dare to ‘think’ of taking their website conversion rate to that level.

Nobody has ever done that, so it can’t be done. They automatically assume that it is simply impossible to do that and the only way to increase conversions is to get more traffic.

But aiming that high is not bad at all for your business bottomline.

You aim for the moon, even if you miss, you’ll still land up on the roof top.

You may never achieve 40% conversion rate, but you may achieve 20% or 15%  or even 10% conversion rate in the process of trying damn too hard to reach that mighty 40%.

But what that really matters here is your change in focus from simply throwing more traffic to the website to actually converting the majority of existing traffic. You don’t need more traffic, you need more conversions.

So my question to you is, what are you doing today to convert the majority of existing traffic on your website?

 

Test your assumptions, fail early, fail fast

Both marketers and business owners make lot of assumptions about their campaigns, products and target audience. But very few take the pain of actually testing their assumptions. These assumptions can be something like creating the best user experience or knowing your target audience too well, which is generally not the case.

If you are not really sure about your target audience then you are most likely to acquire low value customers and end up spending more on customers’ acquisition. The rule of thumb is test, refine and test.

If you don’t have any solid data to back up your claim then it is just an assumption.

It is not a rocket science to understand all this but many marketers/business owners don’t just get it.

Failing early in testing your assumptions and failing fast will help you not to fail often later on. Failing often is just too expensive in any business and can even put you out of business esp. if you are a small business.

 

Calculate the ROI of everything you do

ROI is more important metric than conversion rate simply because it takes ‘COST’ into account. As long as you take ‘Cost’ into account, you can’t go wrong with improving your business bottomline.

Calculate ‘cost per acquisition’ for all of your marketing campaigns whether it is SEO, PPC, Email, Social Media or Display. Hack, even calculate ROI of all of your meetings, business travel and lunches.

 

Hire an Expert

There is always an opportunity cost when you choose to do things yourself in which you are not an expert or when you hire someone who is not an expert.

Why you should not end up with mediocre campaigns and mediocre results or face failure if you choose to do everything yourself or make a hiring mistake? 

In the startup world, this opportunity cost is often the difference between success and failure. The business owner thinks he is saving money by not hiring an expert. But he is actually losing on all those potential sales which he would have got only through the expert.

Hiring an expert may not be profitable at first but in the long run, is the best bang for your buck. Not only you will recover your entire hiring cost sooner or later but you will also make lot of money on top of that and you will continue to do so for a long period of time.

But all of this can happen only when you first understand that you can’t be an expert in everything you can do and that you need someone who is really an expert in his field.

Other posts you will find informative: 

  1. Understanding Universal Analytics Measurement Protocol
  2. Advanced Attribution Modelling in Google Analytics
  3. How to use Agile Analytics to quickly solve your Conversion problems 

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  • SEOinUS

    Thank you for always keeping me up to date with changes! Great post.

  • http://www.skillmills.com/ Skillmills

    Thanks for sharing. Your posts are always so interesting to read, and I’d love to see more!

    • seotakeaways

      Thank you. You should subscribe to my blog then :)

  • Monica

    Great post. I thoroughly enjoyed reading it.

    • seotakeaways

      Thank you