Numbers

Numbers


Numbers is the award winning CBS science drama that shows on Friday nights. It has become quite a hit in the year plus it has been airing. Once or twice in each episode the young math progeny professor (who could multiply four digit numbers together before he could even speak complete sentences) describes how a mathematical concept (simple or otherwise) or mathematical law can be used to assist the good buys in finding or stopping the bad guys. Add some nifty graphics and visuals and it makes for good TV and some true learning about how that dismal mathematics we all learned in high school can be applied to real world problems. For nerds, it shows that you too can be cool. Of course, it is a drama show with the math angle as the device to provide hour -long drama. Nonetheless, it does provide some real-world education benefits, which is more than I can say for practically everything else on the tube.

So what does Numbers have to do with Marketing? Simply this, do you as a businessperson know your numbers? Do you even know what numbers we are talking about? Do you know what numbers are the important ones and which can be happily ignored? If so, go to the head of the class, you are dismissed from class and can go back to adding on to your net worth. IF not, come to the front of the room, pull up a chair and be prepared for some basics.

Here are the questions about numbers you should be asking yourself: How many leads do you get per day? Week? Year? More or less than last year at this time? What is your conversion rate (that is, converting leads into customers)? Is it rising or falling? How many customers do you have? Compared to last month or year? How many potential customers exist in your universe (your market area)? Is the number increasing or decreasing? What market share do you have? How many competitors do you have in your market area? How do you compare to your competitors? How many regular customers do you have versus transient one-of-a-kind customers? What is your average revenue per customer? What is your average revenue per regular customer? Do you know your profit margin for each product? For each customer or class of customer? Can you answer any of these questions?

Why is this important? How does this relate to you? Think of some products. No, not the type of products you sell but the type you get when you multiply two numbers. Your number of leads times your conversion rate provides you with the product that is the number of customers you have. Multiply this number by the revenue per customer and you have total sales. One more multiplication, this time revenues by the profit margin per customer should provide you with the total profit. Do you have these numbers? If not, what have you been using? Do you know how much better or worse you do from year to year? Do you have an idea as to why you are being better or worse? (for instance, if you improve your conversion rate slightly, this increases your revenue and profit stream if all else stays the same.) But if you do not measure it, you have no idea what happened within the black box called your business and hence cannot readily analyze what is the cause of business swings that regularly occur. But you might say I do not have time to spend to analyze my market and my numbers for I must work constantly to stay in business as it is . But I ask you, can you NOT afford to do so?

Take the time to find the numbers that matter, to analyze them, to understand the dynamics of your business, and then use them to make your business grow and become more profitable.