Planning For the Turnaround - Part 2

Monday’s blowout on Wall Street should quiet those “get out there and advertise!” guys. An underwear-staining day for them, no doubt. The other good news: the sooner we get a couple more meltdown days like that, the better the odds of a springtime revival. As promised yesterday, here’s the continuation of your guide to “turnaround planning” (with a final[?] Part 3, tomorrow).

Strategic Choices - Acquisition Versus Retention Versus…

The strategic choice you should have made at the beginning of this year was to overweight your budget toward existing customers. (The great direct marketing veteran Ray Shultz

tracked a survey that found most marketers were doing the opposite, for some reason.)

Your choice next year should be to overweight acquisition, something like this:

- 60% acquisition

- 15% retention

Wait, you say, where’s the other 25%? Increasing share of wallet - a far different strategy than retention.

P.S. Don’t worry about costs for staffing, training, etc. We’ll tackle those tomorrow.

Fun With Numbers - The Marketing Revenue Baseline

For this step, you’ll need the total revenue objective for next year, split by new and existing business. Then determine how much of the new revenue Marketing will be accountable for. Convert that to units of sale and number of customers, then multiply by your average cost-to-acquire-a-customer. That’s your first pass at a budget for acquisition.

First-pass for retention and share of wallet will be in the ratios discussed above (e.g., retention = 15/60 times acquisition).

Add all three, and multiply that total by 130% (this factor will be explained tomorrow). Finally, add this year’s Marketing staffing cost (no headcount increase next year).

Now, as a check, multiply 2009’s planned total revenue by the average percent equivalent marketing expense over the last two years. See if this is within 25% of what you calculated above.

Metrics & Measures

There were many inputs - ratios and such - discussed above, some you probably don’t have at your disposal. They are so essential to marketing strategy development that you should consider assigning someone to collect and analyze any missing data points throughout 2009 so that your 2010 planning will be more precise.

I’ll try and wrap this up tomorrow, and reveal that 130% fudge factor.

Notice we haven’t discussed tactics?

You can get those anywhere.

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WATCH FOR THIS…So much hoo-hah over the 30% ramp-up in online traffic to brokerage sites during Armageddon last week. ShareBuilder’s traffic tripled. Wanna bet the increase in the number of trades placed didn’t match?