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Rocket Fuel or Black Hole?

Let's dive into the world of marketing. For many businesses, it's parallel to rocket fuel, propelling them to remarkable heights. Yet, for some, it remains an elusive black hole, seemingly absorbing resources without visible returns. At Simple Numbers, our experience spans both of these scenarios.


It's important to note that while we're not marketing experts, our primary focus lies in enhancing business profitability. Naturally, this intersects with marketing, making it a frequent topic in our client discussions.


Why do some struggle with marketing? Communicating their Unique Selling Proposition (USP) is often a matter of clarity. If the market understands what sets you apart, your efforts might succeed. Another challenge is tracking the impact of marketing initiatives. Without measurable outcomes, marketing can feel like a venture into the unknown. We've also observed a hesitation to experiment with marketing strategies, leading to uncertain investments.


The next step is understanding the effectiveness of their efforts. We emphasize the importance of evaluating marketing spend relative to the impact it has on gross margin, which is your revenue minus non-labor direct costs. This approach shifts the focus from sheer revenue to profitability, considering that not all products yield the same margin. Effective marketing should aim at boosting high-margin products. To measure this, we look at “gross gross margin (GGM)” which factors in marketing expenses. Observing this metric over 12 months can offer valuable insights into your marketing trajectory. Graphical representations of this data can be particularly enlightening.


Successful companies also recognize the value of experimentation in marketing. Allocating a budget for trial-and-error allows for small-scale tests that can inform more extensive strategies. A case in point is a client from the healthcare products sector who experimented with YouTube ads in late 2019. Their strategic ad optimizations coincided with the surge in online activity in early 2020, leading to significant success. This was temporary due to rising competition, but their willingness to experiment laid the groundwork for this achievement.


Hopefully, you've grabbed a couple of valuable insights here that'll supercharge your marketing, turning it into rocket fuel for your business. If you want to explore the specific metrics we use to track marketing efficacy, please get in touch with us. We're always here for a more detailed discussion.


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