“What about me? It isn’t fair, I’ve had enough, now I want my share” – I am reasonably confident most of us have belted out these lyrics at some time in our life – normally at a later stage of a Friday or Saturday evening, when we are more relaxed and confident in our abilities!
I’m even more confident that a good few business owners were mumbling (or exclaiming!) exactly this after last week’s Budget announcement. While we at Grow NZ Business keep ourselves ‘apolitical’ in our communications, we have to admit we were disappointed in the Budget’s lack of strategic direction for addressing the critical skills shortages and supply chain issues many kiwi business owners are facing. On the upside, we do expect the increased spending agenda will be beneficial for business owners over the next couple of years and we’re appreciative of the additional funding for the tourism sector too.
Of course Budget funding can only solve so much. COVID-19 still remains a big risk in our eyes, not only because of the potential for further lockdowns and restrictions, but also because of the impact it is likely to continue to have on supply chains, tourist numbers, international student migration and the flow of valuable labour resources into our country.
At the end of the day, we can only control what is in our control – so the best advice is keep cracking on and read below for advice on what you can do to ‘get your share.’ We’ll even throw in a $100 credit to get a few of you going faster!
Run, don’t walk…
I’ve had enough, I want my share!
Here we are, at the end of May, already two months into the financial year and before we know it, we’ll be dusting off the elf on the shelf and bracing ourselves for hourly Mariah Carey tunes.
Now is the time to check in on your progress against this year’s profit goal. What is going well? What needs addressing? Are you securing the share of the market you need to achieve your financial objectives?
If you are not quite where you want to be, or are ready to revise those targets upwards, checking in with the marketing funnel is always a good place to start. Next, you need sense check your numbers and look for new opportunities via our Marketing ROI Calculator. During many of the conversations we have with business owners across a range of industries and locations, we discover that the math side of marketing is often not fully understood and neither is the concept of ‘share.’
If you want your share, you need to get in there and understand what that should look like, otherwise how will you know when you get it?!
Profitable share IS within your control.
Profitable share is achieving your desired market share at a price that delivers to your profit objective. And, believe it or not, you CAN control your slice of the profitable share pie (so no more blaming the market or the competition’s tactics.)
In fact, any one business can get nearly 100% share if they really wanted to, but you’d likely find that wouldn’t get you the profit you were after. For example, if I was to sell petrol at 10 cents a litre in Queenstown, I am pretty sure I would get 100% share of the market. But the customer experience would be horrible as cars would line up for miles and I would go broke, as it costs me around $ 1.90 per litre to buy the petrol wholesale.
At 6% share, with a price of $ 2.25 per litre, I lose money as I don’t have enough revenue/ margin to cover my fixed costs.
But at 12% share, with the same price of $ 2.25 per litre, I can make approx. $3,000 per week plus the additional revenue/ profit from what is bought in store – coffee, magazines etc.
Below is some real life data on how you can measure your search in the ‘Demand’ segments i.e., the places your potential customers are searching for the products/ services you provide.
This client below is right in the sweet spot; they are achieving their lead objective weekly and converting to meet their profit goal. While there is more share available on Google, gaining this will drive up costs and take them into the unprofitable zone.
Below is another scenario, the first table is actual performance. This business is already 15% behind on their profit goal for the year and has some cashflow constraints to boot.
The first thing we do in situations like this is look for more cost-effective marketing opportunities, and in this case, as it is for many businesses, BING (Microsoft Advertising) is a great solution. What is most interesting is their overall share will actually be less, but because their cost of acquisition is lower, they get more conversions, as demonstrated in the second example, and make more profit.
As cashflow improves, we’ll move to the third example, where we start to increase market share, still at a lower cost of acquisition due to marketing mix, and drive profit even higher…Sound like a plan?
Of course, these above examples do simplify the approach, in reality there is much more complexity behind this detail, but what it does accurately demonstrate is that the principles of share, the marketing funnel and over-managing the levers of marketing return on investment are the key to growth, regardless of your spending budget.
To support you as a Grow NZ Business member, we have a few $100 Microsoft vouchers available to help you get your profitable share – find out more by clicking here.