In this episode you’ll hear me a question about how to reduce your paid media costs.
So, listen here as I discuss this!
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Transcript:
Question
Hello. I currently advertise and promote my business in many different ways for example my own website on OTAs and Facebook etc and to add or support this mix I also have adverts on Google AdWords whilst there is little doubt that their effectiveness is anything from fairly good to very good they are also very expensive especially when you take into account the cost of the company managing them as well is there some other way to achieve the same or similar results without the expense?
Answer
Fantastic question. so what I want you to do is listen to my answer I just gave to one of the previous calls about McDonald’s and how they acquire customers for breakeven or just a tiny bit of profit and then they upsell to make profit on the back end so really what this is comes down to an economic term called the fair value line so the fair value line is the amount value that you are offering is in proportion to the amount of money we are charging so if you’re offering a ton of value to customers the related price point for that is obviously very high if you’re not offering a ton of value to customer then obviously the price point in relation to that is a little bit lower so what I want you to think about is all the possible things that you could offer this customer that’s coming in now they’re obviously buying a product from you and they’re you’re spending some money on paid media and also someone to manage that process so there’s a total cost view now I really want you to think about what that cost is and all the other products that that person could buy from me so and I’m really just talking about every single product that could help them get the result that they want now I’m not sure exactly which business you’re currently in but I want you to get over to paper and just write down everything that could possibly help them get the result that they want not just the product that you’re currently selling them then I want you to plot that on a fair value line so on one of the axes so as to say the y-axis is how much value of providing them and on the x-axis they related cost that and I want you to plot all of those different things that you could possibly offer them to help them either in terms of speed or automation to get that result and plot on that line and see where it all comes out so then what I want you to do is your very, very expensive the most expensive thing that you could offer them and obviously that’s the probably going to be the most valuable thing I want you to then start splintering or skimming off other components of that getting down to something that’s a little bit more cheaper and hopefully that’s where you align your current offering so basically what I want you to be doing is thinking about getting that person that customer in at cost or maybe as a slight loss as a loss leader or just a slight profit and then once they’re in as a customer then up selling them to hire more valuable products that have a higher price point that way you can spend a lot of money acquiring that customer even though you’re not going to make money off it initially just like you know McDonald’s or Hungry Jack’s does and then upselling them and making your profit there now this takes a bit of creativity of all the types of things that could help them get that result but I really want you to think about all of those things that will help them the other thing is I want you to think about diversifying how you’re actually getting your customers now in your call you said you had like you had Facebook ads and sorry big department Google ads and you’re spending a lot of money on pay advertising and someone to go about managing that process so there are a few different ways that you can communicate with customers and prospects one of those is paid media so paid media is something that you don’t own but you actually control it you so for example Google AdWords Google owns that network but you control it by paying for it the other way you can go about getting customers and prospects is through earned media so you don’t own it nor do you control it so really good examples that this Dalek pub PR and publicity and also having the rank on Google so you don’t actually own any of those and you don’t actually control how and when you show up it’s all earned and then finally you’ve got your own media so all of the things that you control and you also own so like you mentioned your website but also communication channels like email and phone and text and messenger and all these digital communication platforms so I want you to be thinking about how you can move away from paid media into earned media and then those stories – paid and earn how can you drive them towards owned media so you’re spending money with paid media and you’re spending time and effort with earned media how can you capture although that attention and then put it into your own assets the ones that you earn and the control in your own media and then start communicating with people even before they become customers – at the prospect stage how you can communicate with them so they become customers without actually having to spend any more money and in addition to that once you’ve already captured them as your own media how can you source them again and again so hopefully those two things about really thinking about where you sit in the fair value line and how what you are currently spending can be an entry level solution or product or service and then once you’ve got them converted in from a customer sorry from a prospect into a customer how can you then upsell them and help them get whatever they’re trying to get faster cheaper with more speed or whatever adjectives they want and also make them more cost effective but then also diversifying how you’re getting those customers in terms of thinking about paid earned and owned media and pushing the forum by the former – into the ladder so you’re not actually spending a lot of money in the long run so hopefully that answers your question and helps and try it out let me know what happens and see how you do.