When dividing up your available budget to spend on advertising for the quarter or year, you should consider looking at four levels. Here’s an approach for using your money wisely and effectively:
- Existing customers. You’re already making money from them, and it’s likely that they will spend more or purchase new products. Keep them informed of all changes and innovations in your products and your company. Repeat business is the name of the game. Regularly spend 40 to 50 percent of your advertising budget on existing customers.
- Serious prospects. These people have not yet purchased, but have come close. They’ve made several inquiries, browsed your store or website, or received a quote and need a little nudge to be a buyer. Spend 25 percent of your budget on serious prospects.
- Casual prospects. These people have made one inquiry, sent back a postcard, or perhaps requested literature, but you never heard from them again. They need more prodding. Spend 15 to 20 percent of your budget on casual prospects.
- The rest of the market. These are people in your selling world you have never heard from, and you’re not sure whether they would ever be customers. Spend the remaining 5 to 20 percent of your budget on them.
The part of your budget you’re spending on each of the last three levels is trying to move people to the next highest level until they become customers. The part of your budget you’re spending on the first level—your customers—is to keep them as customers and attempt to sell them more. Keep separate lists on your computer for each level and move prospects from one list up the ladder, hopefully to the customer list. Be sure to delete prospects from the lower-level list as you move them up, or you’ll be duplicating prospects and wasting valuable advertising dollars.