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Archive for June, 2013

Marketing by numbers

Marketing by numbers is about approaching marketing as a professional. Amateurs waste money and go on gut feel, professionals are commercially minded and use numbers to help them get the most from their marketing.

There are lots of numbers in marketing including the number of customers, average spend, hits on your Website and your email open rate but one number above all will determine your entire marketing strategy; that is the Lifetime Value of a customer. Once you have this, you can work out how much you can afford to spend to acquire a new customer.

You really must have these numbers before you do any marketing because they give you massive leverage.  You will be able to do things your competition will not understand and your customers will respond to.

The lifetime value of a customer is how much profit this customer will give you over the time they do business with you. And, I recommend you take into account referrals because they should be a key part of your marketing.

So, let’s use the example of an accountant whose average fee is £2,000 and let’s say they make £500 profit after allowing for all overheads, employees and a notional salary for the owners time. If that client stays for an average of seven years the client is worth £3,500. But, if they refer three other clients in that time, their value goes up to £10,500.

Now, a typical accountant is unlikely to recognise the lifetime value of a client because Lifetime Value is a marketing concept. Instead, they will think a £2,000 client is worth about £2,000, because that is how accountancy firms are bought and sold.

They will probably only want to spend £500 to win a new client, because they are always trying to make a profit. The trouble is, £500 is not a very generous budget and this may compromise the entire marketing strategy because they fail to invest enough time, energy and money putting together and managing campaigns.

However, if they embraced the Lifetime Value of Customer, then using the same percentage of 25%, they would be happy to pay £2,000 to win a new client. This means the accountants can afford to invest in professional marketing. They can buy a quality database, mail more than once, follow up and engage the client with numerous meetings.

Having this mindset means you can afford to make compelling offers and provide a bit extra support in the early stages of working together to build a solid foundation.

So, before you move forward on your marketing, do two things:

1. Work out the Lifetime Value of a Customer

2. Calculate how much you are prepared to pay to buy a new customer

When you have these numbers you must also make a commitment to manage your marketing by numbers. Everything should be tracked and reported on. You need to innovate, orchestrate and quantify. Come up with an idea, take action and measure the results.

Always test first and it’s useful to assume the test will fail. This will help you put it into practice quickly.

Psychology and marketing – part 2

We saw in part 1 that we sell feelings, the question is what types of feelings?

This is where we can look at Maslow’s model model of the levels of motivations of humans.


Our most basic needs are physiological, the continued existence of our physical body.

These are our strongest needs. They include things like food, shelter, and warmth. Unless our basic physiological needs are met we will not concern ourselves with a higher need.


Once our physiological needs are met and we know our body will survive, we need to feel safe. Our search for safety at a fundamental level it’s about protection from the elements and feeling safe and secure. Our need for safety also expresses itself in more subtle ways. For example we feel safer and more secure in familiar surroundings. This is why people often feel resistance or fear toward change.

Our fears of risk or loss come from a fear of the need for safety not being met.

Some of the things that we do to help us feel safe are to purchase insurance, put money in the bank, have a business that we feel will be around for a long time and save for our future.


When we are confident that our physiological and safety needs are met, our next desire is love. This is not really about romantic love, although that is part of it, but more significantly the need for connection or belonging.

Human beings do not like to live in isolation. We are social animals and that is why being sent to Coventry hurts. Being connected with others is an important need and is a strong motivating force that serves as the basis for all relationship building.

Love also includes a sense of approval and acceptance as well as being acknowledged and valued for who we are and what we have accomplished.

The seeking of love, approval and acceptance is a very strong need that explains a lot of our behaviour in the world.


According to Maslow, our need for self-esteem is the need for us to feel good about who we are and what we have accomplished in our lives.

We need to experience this satisfaction internally, as opposed to receiving approval and acknowledgement from the outside.


The need for self-actualization is the highest human need. This is where you have complete satisfaction, a feeling of well being and peace. When you have this you are content and are in a state where you are motivated to serve others.

How to use Maslow in our marketing 

Segmentation is a key part of marketing and knowing people’s motivation will enable you to communicate at the right level.

If you are selling cars you may have a different message to a family with a Volvo than to a young male with a sports car. One is after Safety, the other is looking for love and approval.

Make sure you are marketing and selling feeling. And, make sure they are the right types of feelings.


Psychology and marketing – part 1

Marketing is about communication, persuasion and influence so it’s useful to have some understanding of psychology around human behaviour. At the end of the day, customers are people and people are emotional animals. We all buy emotionally and justify logically.

Remember, all customers are selfish. Customer only care about their pain or their pleasure. If you are talking about you and what you do in your marketing you are broadcasting on the wrong channel. Your customers are listening to Radio WI fm – they want to know What’s In It For Me.

So, it’s vital we understand our customers motivation so we can communicate effectively.

Now, the truth is that most of what we do in the developed world is done for “wants” rather than “needs”. Think about it, we are way past need; we need an Iron Lung if we can’t breathe but do we really need to wear expensive jewellery, go out for dinner, drive a BMW, have that new kitchen, replace our golf-clubs, own a holiday home or spend the money we do?

No, most of what we spend is not needed so the question is why do we spend money? What motivates humans? Well, a useful concept to explain this is Maslow’s Hierarchy or Needs.

Dr. Abraham Maslow was a psychologist who specialized in human behavior. He created a pyramid that shows a hierarchy of the human needs that he believed were the motivators of people’s actions.

According to Maslow we seek to fulfil our most basic needs first. These are at the bottom of the pyramid. Each of these needs must be satisfied before we concern ourselves with the next need in the hierarchy. The key point is that humans are driven to reach the top of the pyramid but will only move up as each lower need is fulfilled.

What’s interesting is that we are not always conscious of the true motivation for our actions and nor of your customers. When you ask people to explain why they do things it’s usually because it makes them feel good.

Giving and getting

On-Track is a service where I work one-to-one with business owners to help them grow sales, increase margins and boost cashflow.

There are different elements to On-Track including:

  • Helping create a budget with targets
  • Performance reporting
  • Regular meetings
  • Suggestions and ideas


Many of the suggestions and ideas I put forward are based on what I see working for other business, including my own.

I have been researching different approaches to marketing and one of these is called The Purple Cow – a book by Seth Godin. Basically, the idea is to innovate around your product and come up with something “remarkable” so it’s worth talking about.

Remarkable services and products get people talking and can be a key part of your Word Of Mouth Marketing strategy. This is much better than spending lots of money promoting what you do.

An example of business that has done this is TOMS shoes. They run a one-for-one program where every time someone buys a pair of shows they give one to a child in need.

I really like this because it links the giving to the product and it gives a reason to consider buying TOMS shoes rather than other brands.

I’ve decide to do this myself via B1G1. Now, I do not sell shoes but I do encourage clients to refer me and when they do I give a goat. This provides HIV free milk and revenue to a family in need. A client referred me last week and when they found out about this they were amazed.

So far, Sackmans North London has donated:

  • 2 domestic animals to Kenyan families to provide them with an income
  • 10 children education support for a day
  • 10 children a school uniform
  • 10 people medical support
  • 357 people access to clean water for a day


I’m looking to expand the campaign and will include “giving” and “b1g1” in the On-Track service.

If you like an On-Track Review click here.

Boost cashflow and reduce hassle

Good news for small businesses, PayPal will be launching a portable chip and PIN device soon.

Using the brand name “Here” the small device can be used anywhere in combination with a smartphone via Bluetooth.

Aimed at small businesses, who have normally had to rely on cash and cheque, Here enables them to accept PayPal, debit and credit cards wherever they are.

This could be on your market stall, shop, restaurant or taxi. You could even take money from someone you meet in the pub!

You could start to have a mobile sales force or have multiple tills.

Businesses will also be able to use the PayPal Here to log cash/cheques and send invoices and receipts. And, because PayPal links to Xero Accounting Software the bookkeeping process is streamlined.

The really good news is that unlike traditional chip and PIN devices, PayPal Here does not require a contract or ongoing fees. There will be an upfront cost and a small fee per transaction like when using PayPal online.

Could this be a “game changer” for small businesses?

PayPal Here will let you offer your customers another way to pay while saving them the hassle of taking cash and cheques to the bank.

It is also more secure uses fully encrypted Chip and PIN technology and is backed by our world-class risk and fraud management systems. So, you and your customers can get on with doing business, knowing that all financial information is kept secure.

To register when PayPal Here goes live click here.