If you want more leads for your service business you have two options - spend more on marketing and advertising or improve your conversion rate.
Nothing beats word of mouth marketing - a customer so happy with your service that they can’t help but tell others how great you are and why they should choose you over a competitor. Providing a customer experience so good that it transforms customers into advocates should be the aim of every business. But even the best businesses can’t rely solely on word of mouth marketing, not if they want predictable and steady growth. There just aren’t enough customers spreading the word. That’s why businesses invest so much time and money into marketing and advertising.
Marketing and advertising, when done properly, is a smart investment that can help you reach consumers and help you grow your business. It’s something every business should be doing. But you will reach a point when marketing and advertising are no longer your best option for generating leads. In fact, in this post I’ll present the argument that marketing and advertising may not be the first thing you should focus on when you want to generate more leads and customers for your business.
Let’s dive in a take a look at how you can win more leads and customers for your business. We’ll begin by asking the question “is your marketing and advertising investment paying off”? This will set the stage for us to compare the two lead generation options.
Let’s say you provide services that help people with their widgets. The average value of each sale is $100. Last month you spent $1,000 on marketing and advertising. Here are your results for the month:
Your $1,000 investment has paid off. You’ve made 25 sales and a profit of $1,500 (for simplicity sake we’re not accounting for customer acquisition costs or the cost to deliver the service). After a few months of doing this, you have a steady and reliable way to generate sales.
But what if you want to generate more sales and grow your business? You have two options:
Increasing your marketing and advertising budget is the option most businesses think of. It’s the obvious choice. If you invest $1,000 and it generates 25 customers and revenue of $2,500, why not double your marketing and advertising investment so you can generate 50 customers and revenue of $5,000?
The other option which most businesses don’t think of is improving their conversion rate. This option isn’t so obvious - for reasons we’ll discuss shortly.
Let’s take a look at each of these options and see what kind of results they produce. We’ll begin by taking a look at what could happen by increasing your marketing and advertising budget.
Your investment in marketing and advertising is paying off so you decide to double your investment. Here are your results for the month:
Like you predicted, doubling your investment paid off. This time you generated 50 sales and a profit of $3,000. It seems like the sky is the limit. If you keep increasing your marketing and advertising budget you can keep growing your business.
But before you commit to increasing your marketing and advertising budget, there is one other option we need to look at. What would happen if you improved your conversion rate?
Improving your conversion rate isn’t an obvious option, especially when your marketing and advertising are working. But you need to ask yourself “is my marketing and advertising working as well as it should”?
More than 95% of website visitors don’t convert into leads or customers and most won’t return. This means the average website has a conversion rate less than 5%. If you want to verify these numbers for yourself just do a Google search for average website conversion rate. You can also check your website’s analytics. You’ll find that the average conversion rate is actually closer to 2.5%
Because businesses can be profitable with a 5% conversion rate (even a 2.5% conversion rate), they don’t stop and ask themselves “why are 95% of my website visitors leaving without converting into leads or customers”? This is a question more businesses need to ask themselves.
Now let’s take a look at what could happen if you invest in improving your website’s conversion rate. We’ll use your initial investment of $1,000, but instead of investing it in marketing and advertising, you’ll invest it in conversion rate optimization (CRO) - the process of improving your website’s conversion rate. Here are your results for the month:
Were you expecting these results? Your investment of $1,000 generated 50 sales and a profit of $4,000. But a lot more happened than just increasing your revenue and profit. By improving your conversion rate you also reduced your cost per customer. And these aren’t one-time results. Your business will benefit from your improved conversion rate month after month.
The idea of marketing and advertising is fairly straight forward - in a nutshell, you invest time and money to reach consumers and drive them to your business. However, the idea of improving your conversion rate may not be as obvious. So let me explain…
Improving your conversion rate is done through a process called conversion rate optimization or CRO for short.
While the concepts of CRO can be applied to any part of your business - both online and offline, it’s often discussed in the context of a website.
Improving your website’s conversion rate is done using CRO software, which gathers data and insights about how consumers use your website. With this data you can see how your website is helping or hindering consumers from reaching their desired outcome - learning about and/or purchasing the services you provide. With these insights you can make changes to your website designed to improve the visitor’s experience. CRO is an ongoing iterative process.
While a lot of assumption were made to present the above examples in a manner that is easy to understand, the examples reflect the outcomes a business could expect to achieve - increasing your marketing and advertising investment should produce similar results on a larger scale, and improving your conversion rate can increase sales while reducing costs.
Marketing and advertising, and conversion rate optimization (CRO) work together. There is no point in investing in marketing and advertising if the people you are reaching do not convert into leads and customers. And there is not point in investing in conversion rate optimization if you do not have consumers visiting your website (or business). They work together.
Just as one may ponder the question of the chicken and the egg - which one came first? You may ponder the question of what you should invest in first, marketing and advertising or conversion rate optimization? While you should invest in both, at least initially, you should take a CRO-first approach to your marketing.
Marketing and advertising requires that you have supporting assets. For example, if you want to use paid online advertising, such as Google Ads or Facebook Ads, you’ll often need a web page to send consumers to when they click on your ad. If you want to reach and engage consumers organically, such as through Google search or social media, you need to publish and promote valuable content.
Your web pages, content and anything else you utilize to reach consumers works best when it is optimized to provide consumers with a great experience. Taking a CRO-first approach to your marketing will naturally help you provide that great experience, as providing a great consumer experience is the underlying purpose of CRO.
Now, you’re probably saying to yourself “wait a minute, don’t you need to acquire traffic first before you can worry about conversions”? In short, yes. But here’s the thing, when you focus on CRO, you naturally address many factors that affect organic reach. In other words, when you perform CRO properly, it can have a positive impact on your search engine optimization (SEO) efforts. So, a CRO-first approach to marketing will not only help ensure you maximize your marketing and advertising investment, but it can also help you reach more consumers.
While there are endless lead generation strategies you can employ, they all fall in to one of two categories - traffic acquisition and conversion optimization.
If you want to maximize your marketing investment and generate more leads and customers for your service business, it’s time to take a CRO-first approach to your marketing.
A CRO-first approach to marketing can help you…
If you have questions or would like to learn more about how you can improve your website’s conversion rate, so you can generate more leads and customers, talk with a STRADEGY.CA Advisor. We’re here to help!
Until next time, I wish you much success - Toby
Toby is the founder of STRADEGY.CA and principal Advisor. He's been helping service businesses navigate the digital economy since 1996.
Discover the 6 step digital marketing strategy local service businesses are using to out-compete the competition and win new leads and customers.
Discover the 6 step digital marketing strategy local service businesses are using to out-compete the competition and win new leads and customers.
