Matt: I don’t wanna work with you!
Chris: Oh, okay… Shall I go?
Matt: No! You should find out why.
Chris: Oh, okay!
Matt: Hi, I’m Matt.
Chris: I’m Chris.
Matt: And it’s another Monkey Monday.
Chris: Yeah. But what’s it about? That was very cryptic.
Matt: I know. So what we’re talking about is mostly online marketing here, but it could apply to almost any marketing. And it’s about return on investment, and we’re gonna just throw a couple of phrases at you, so: ROI, return on investment, money in to money out; and ‘closed lost’. Now ‘closed lost’ is a fairly generic term you see in most CRMs (customer relationship management tools), where something will move down a sales pipe, and at the end of it, most of the time what will happen with a sales enquiry is it will either be closed and it will be won, or it will be closed lost.
We really wanna talk about the power of closed lost, because it’s an under-utilised resource, if you like. So what we want to try and encourage you guys to think about is when something moves into closed lost, if we understand why it’s lost, then you can trace it back and do some really valuable things for it. So we’ve seen a few customers actually and what can happen is, we can do all these great online marketing campaigns and drive them a load of traffic and - if we understand the value of what we’re sending them as well we can monetize that. We can say, ‘Hey, Mr Goor, in your business you’ve been paying us £3,000 a month and we can see we’ve been sending you £2 million worth of enquiries per month.’
And we could be sat there being pretty happy with ourselves. However, you may be unhappy, because…
Chris: I’ve only sold £20 worth of hats.
Matt: Oh we’re selling hats today.
Matt: I’m pretty impressed with sending you £2 million worth of enquiries in hats. So if we don’t have that connection and we don’t see that conversion, and if that’s not hooked up, that can be a very challenging thing for an agency, or for your own internal marketing department. If they’re in charge of all that, they might be sending all this stuff to the sales guys and not knowing that it’s not converting or where it’s coming from.
Now hopefully you’ve got all that hooked up and understood. So you might be able to see what’s converting well and that could be a good thing. That £20, you might go, ‘Oh, that did really well for us, Matt, can you do more of that?’ and we can go, ‘Yeah, that came from this campaign. Let’s put more money behind that one.’
But the closed lost ones. Let’s talk about those. Because what can happen, there can be lots of reasons why that’s happening. Why that’s not converting. And until we see it, we’re not really sure. So for instance, it could be that your processes are bad! Maybe you’re really bad at selling. Maybe your sales team are awful. Is it just you selling these hats?
Chris: Well, it is me, but my quoting system is pretty rubbish and I send out handwritten quotes, which take about three weeks to go out. So is that the problem?
Matt: It could easily be. So there could be processes, it could be the sales team, it could be something entirely non-technical. There could be some other really interesting reasons why that amount of leads aren’t converting.
So what you could do is start putting them in pots, these closed lost. You could go, ‘Well, these closed lost because none of them could afford it,’ and we could go, ‘Okay, great, let’s have a look, let’s analyse those.’ So what you wanna do with those closed lost is trace them all the way back to see where they came from. Now maybe they all came from an advert that said, ‘Cheap hats!’
Matt: And you could go, ‘Well, hang on, maybe these hats aren’t as cheap as we thought.’ You could tweak that paid advert to say, ‘Quality hats, from £20.’ And you could put the exact price on there, and you’ll see straightaway that you’ll reduce the amount - you’ll reduce your cost per click for a start, because people will stop clicking on those ads, because they already see the price, they already understand that that’s not the budget that they’re in, that’s not the market they’re for. So your cost per click will go down, and you’ll get a better quality of traffic through, and hopefully, from that pot you’ll see it either disappear entirely or will convert better. And there’s lots of reasons why some campaigns may fall into that closed lost category.
Chris: Now, is it a stupid question to ask what is a good return on investment? Like, percentage-wise?
Matt: Well, that is a really good question, and it’s one we get asked a lot. Now, if we’re looking at online marketing only, we would always say that if you put £1 in, and actually you get £1 profit back out of it - especially when you start - that’s not so bad. It doesn’t sound great, but that’s okay. Because in between that £1 in and £1 out, you’ve got a massive amount of engagement, a massive amount of brand exposure, you’ve got people that might return back to you, and you’ve got at least some sort of sale happening. They may come back as a return customer, and they may recommend you to other people.
So once you get to that, that’s okay. Now, obviously, if you can get £1 in and £15 back, you’re in a really good position. Your model’s working really well for you, and you can pretty much ramp up and down that paid advertising to bring in the amount of business you want or don’t want. So some businesses if they get a really good return on investment like that, they might actually turn off the tap so that they can still provide a good service, because that growth could be too aggressive.
Chris: That was interesting. Anything else?
Matt: I’m just going to check to see if we’ve missed anything because I just riffed that. I just riffed it, man.
Chris: You riffed all the way through that.
Matt: I did.
So why would you do it? Well, you can see how well your marketing converts. I think I talked about that. You can identify weaknesses in online campaigns, by tracing it back…
Matt: You can identify weaknesses in the business… Chris is bad at selling hats. And you can hugely improve that return on investment by making some small tweaks once you understand what’s going on. Some small tweaks can make a real difference.
How do you do it, though? That’s the important part. So we like to use automation, and there are loads of ways you can do that. So if you’re selling through a CRM, or if you’re selling online anyway, most of that can be done, you can measure all the conversions through Google Analytics or some other tools, so you should be able to see that money in, money out, if all you're doing is selling online. If you sell not through the website and you bring people in and you quote them for a service or something, then it’s a bit different. That’s when we recommend a CRM, that’s when you can move them into the closed lost, and you can do some automation so that when things go into the closed lost you can attach a value to it, and you can do some automation to then put that into Google Analytics. So you can get these figures straight into the analytics if you hook it up correctly.
There’s some semi-automation you can do as well, so perhaps that CRM hook-up to Google Analytics is troublesome, you can’t be bothered to do it, it’s too headache-y, you don’t have the technical know-how… Get spreadsheets, do it that way - download the data, use some spreadsheets, do it that way. You can do it entirely manually, actually, through those sorts of systems. You can use those spreadsheets and put them into something that will do some analysis, or you can look at them manually yourself.
But finally, and most importantly, make sure you have a human checking this stuff and looking at it, and tracing it back and using their knowledge to understand what’s going on.
Chris: Yeah, it’s really important to keep tweaking rather than just throwing good money after bad. If you’re pretty bad down the sales pipeline, putting more money in the top end isn’t really that useful.
Matt: Yeah, and again this goes back to all those touchpoints we always talk about, and customer journey, just like Chris mentioned, if you’re quoting and your follow-up procedures are really bad, improving those touchpoints can improve that return on investment and make all of your marketing work better for you. There we go.
Matt: I’m back for more business please. I've decided I would like to work with you.
Chris: Okay, I’m going to sell you 1,000 hats.
Matt: I don’t want 1,000 hats. I’m gone.
Matt: Chris has learned nothing.
So anyway, thank you very much. I’ve been Matt!
Chris: I’ve been Chris.
Matt: What’s on your crotch today, Chris?
Chris: Oh, on my crotch are some videos to watch that YouTube recommends.
Matt: And on my crotch is the video that we’d recommend.
Chris: And if you’d like to subscribe, that’d be really good.
Matt: Thanks, take care!