Image via WikipediaA surprising question appeared on a business forum recently: Do I need to get business cards?The poster said that his business was entirely online. He had no face to face contact with his customers. The only communication was by order and email, with an occassional phone call to clear up immediate problems. He didn't see why he needed business cards - and his arguments were pretty sound.
The question must have astonished most of the forum. No one replied for nearly 3 weeks.
Finally, someone posted that business cards had helped build his business. He included business cards in all packaging along with the invoice, and passed them out whenever he met someone. The business cards helped his customers remember his business, or to find his online store.
The discussion ended there.
The question is valid though: Does a small wholly online company need business cards?
Marketers will say emphatically Yes. Invoices with contact information are good. Most people put them away after they're paid. The only time an invoice gets any attention is at tax time.
People handle business cards differently. They're usually put into a card file on the desktop. Whenever the person thumbs through the cards looking for something, they momentarily see each business card. Even though it's just a fraction of a second, that's enough to remind customers of the business.
For that small moment, the Customer will remember the purchase. They may even return to the website - and buy something else. That's enough. The business card has paid for itself and more.
5oo business cards cost about $100, or about 20 cents a card. If the merchant makes $5.00 on the purchase, that's an ROI of $5.00 (- not counting the original purchase -) for 20 cents.
Let's have a little fun with the numbers.
If that were the only purchase anyone made because of a business card then the guy spent $100 to get $5. That's assuming he got rid of all 500 of the cards. If he did put all 500 cards into potential future Customers' hands, the chances of him getting the one sale is .. 500 to 1.
That's pretty good odds. - Sorta.
How many Customers have to buy something for him to break even on the business cards? $5 per sale. He needs to make $100. That means he has to make 20 sales to cover the cost of the business cards. - What are his chances of that? 20 out of 500, or .. 25 to 1.
The odds are getting closer. But most people would make a bet if they knew there the odds were 25 to 1 in their favor.
What if he only passed out 100 cards? That's 5 to 1.
Or 200 cards? 10 to 1.
The odds are still in his favor. But where does he decide he's willing to make the bet. He's betting his business and income, remember?
The potential ROI on his business cards depends on how many cards he puts into potential customers' hands.
There's a joker in this deck of cards. What he makes depends on how quickly he gets the cards out. Let's say he finds for every 10 cards he passes out, he makes a sale.
If he passed out 100 cards, - That's 10 sales. - or $50. He hasn't paid for the cards.
If he passed out 300 cards, - That's 30 sales. - or or $150. He's paid for the cards, but hasn't really made much.
How long will it take him to pass out 300 cards? A week? A month? A year?
If he made $50 ($100 for the cards. He made $150 from 30 sales.) from 300 cards in a year, that hardly makes the cost reasonable. He could make more money from doing something else to promote his business.
Thinking about ROI means thinking about thinking about how long it will take to recoup the investment.
If his online store made 1000 sales in a year, and only 30 of them resulted from the cards, is that a worthwhile investment?
The answer is .. Yes. -- Why?
After the cost of the cards, he only made $50. Then again, he sent out 700 invoices that didn't have business cards, didn't he?
There are maybe 700 of his Customers that never got a card. And he could have handed out cards in other places.
But none of these numbers are the real reason he should have a business card. The reason he should have a business card is Customers' expectations. A business card with the invoice supports the perception of the business.
If he meets someone, handing out a business card is expected. People question of he's really in business if he doesn't have one.
A business card supports his reputation. There is nothing more valuable to a business -especially a small online business- than their reputation. It reflects upon the perceived integrity of the business.
But how do you put a value on reputation? It's part of his investment in business cards.
There are significant factors in ROI that can't be expressed in hard numbers.
How valuable these factors are to a business depends on the nature of the business.
If the owner assumes that Customers will come to the site one time to either make a purchase or not, then there is much less value to distributing business cards to help establish reputation. There is still some value since one-time Customers may refer others.
If the company expects to sell repeatedly to Customers, then the value of business cards to establish reputation -and to bring Customers back- is much greater.
More depends on the long-term plans of the business:
- Does the business plan to add more products?
- Will the new products be more profitable?
Incorporating a little fuzzy logic may help. There is an old marketing adage that it costs 6 times as much to keep a Customer as it does to find a new one. That means the $150 he made from the business cards is worth .. $900. He only made $5000 for the year. Suddenly, the value of the business cards is worth nearly 20% of the revenue.
It is using fuzzy logic, but the difference of $650 can be seen as the long term value of the investment in business cards.
On a card by card basis, the $100 spent on each card represents an ROI of $900. The cards that cost 20 cents each have returned $1.80 per card (- really $3.00 because only 300 of 500 cards were distributed.)
There are many other factors. Some can be quantified, and some can't. Determining the quality of these factors depends on the priorities of the business.
Assuming again that the company made $5000 for the year:
- How many visitors came to the site? We know that 1000 people bought products.
- How many times did repeat Customers return to the site?
- How many times did visitors come to the site before buying?
- Why did people return to the site?
We'll explore a few of the specifics in another article.
SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.
No comments:
Post a Comment