# The Business Of Marketing: The 4 KPI's of Your Marketing Machine - Part II

In Part I of this article (The Business Of Marketing: The 4 KPI's of Your Marketing Machine - Part I) we reviewed the 4 KPI's of your marketing machine. Now that we know the important factors we should be tracking in our marketing department, let's work on building the marketing plan for our business.

You'll be amazed at how much easier (and less stressful) it is to do it this way.

### The 50,000-foot View Of Your Marketing Plan

To begin with, you'll want to look at your marketing plan from the big picture. You'll make a few basic calculations to start your plan off with.

*** NOTE – I've created a spreadsheet to help you do this work and the next steps.

First, you'll need to set a goal for the amount of revenue you want your company to generate over the next year. For this example, let's say you want to generate \$1,000,000 in revenue.

Next, we need to know our marketing percentage (one of the KPI's in your marketing machine). Again, for this example, we're going to say 10 percent is our number.

Based on the above, we simply multiply our revenue goal by our marketing percentage. This will give us the marketing budget we need to invest into our company. Using the above numbers, our marketing budget would be \$1,000,000 revenue multiplied by 10 marketing percentage, or \$100,000.

Now, we know that we need to invest \$100,000 into our business in marketing. Otherwise, we will strangle the lead flow into our business and not hit our goals.

Next, we need to cross-check our expectations against real numbers to make sure our marketing plan is feasible.

### Cross-Checking Goals & Expectations

Hopefully, you are tracking the four KPI's I wrote about in Part I of this article in your business. If not, get to work on it! It's absolutely crucial that you know these numbers.

In the meantime, you can use assumed numbers to complete the exercise. Don't worry, once you know your real numbers, you can always come back and make adjustments.

The next step is to determine how many leads you'll generate from your marketing budget. This is where you're Cost Per Lead KPI comes into play. By dividing the marketing budget by the Cost Per Lead (CPL), you'll know the number of leads to expect from your marketing efforts.

To continue our example, let's suppose our CPL is \$100. By dividing our marketing budget of \$100,000 by our CPL of \$100, we know we should expect 1,000 leads.

Ok great! So how does that help?

This is where your Average Dollar Per Lead KPI helps you. By simply multiplying the number of leads to expect by your Average Dollar Per Lead (ADL) number you will know the amount of revenue to expect.

Let's suppose we have an ADL of \$1,000. If we multiply this number by the number of leads we generate we come up with \$1,000,000 in revenue.

Ok, we set a revenue goal with our marketing plan. We used our previous results and came up with an expected revenue amount. The big question is... did they come close to each other?

If so - congratulations! It looks like your goals are in line with reality, and your plan is looking good so far.

If not, it's time to make some adjustments.

At this point, there are four options you have to make adjustments in your plan.

1. Change Your Revenue Goal – Perhaps you simply need to change your goal. That's no fun, but it's an option.
2. Change Your Marketing Budget – By allocating more money to your budget, you'll increase the amount of leads generated. With all things remaining the same, this can help get your plan in check.
3. Change Your CPL – If your marketing machine gets better and can buy leads at a lower overall CPL, you may be able to hit your goal. Keep in mind, the adjustment has to be realistic. If you need to drop from a \$100 CPL down to \$20 to hit your goal, your expectations are likely out of line.
4. Change Your ADL – If you can improve on the conversion steps between generating a lead and closing a sale (thus, increasing your ADL), you may be able to hit your goal. As above, the adjustment has to be realistic to work.

More than likely, a combination of the above factors will give you the proper mix to get you to your revenue goals.

Once you've tweaked your plan to make sense, you've completed step one in the process. You have a "50,000-foot view" of your marketing plan - the big picture idea.

The next step in the process is to dig down into more detail and determine where, when and how much of your budget to allocate to your different marketing sources.

This is where having a detailed reporting system that gives you the same KPI information for each of your individual lead sources is crucial. We'll need to get out of the "bucket" way of thinking and switch to "individual" thinking.

Congratulations on making it to this point!

### Wrapping Up & Part III

If you already have the reporting system that gives you KPI information on each of your lead sources individually, you're ahead of the curve and ready for Part III of this article. If not, spend time over the next month gathering and compiling the information. It will be crucial for you to finish the second steps in building your marketing plan.

In the final part of this series, I'll show you the extreme importance of allocating your marketing budget properly. You'll see how small adjustments in where you spend the money (as well as how much) can have a major impact on the amount of revenue your company generates.

Plus, I'll share with you my top insider secrets that can lower your CPL by 20 percent and more.

Damion Rutherford is an 11 year vet in the construction marketing industry. He's personally generated over 150,000 leads and millions in revenue for home improvement contractors across the country. Learn his insider secrets to construction marketing at www.Contractor-Marketing-Tips.com