According to the latest Interactive Advertising Bureau (IAB) advertising report, it is said that there was a total of $88 billion spent on online advertising in 2017.

This is a 21% increase from 2016!

You can see that year after year, businesses are spending more money on digital marketing.

But Why? Why don’t businesses only rely on Word of Mouth?

Well, there are some businesses who believe that Word of Mouth is the way to go.

They believe in tapping into friends, family & personal network.

However, depending on word of mouth alone is very risky.

This is because you may not have much leverage over exposure.

There’s only a limited number of people you can meet within a day.

Therefore, not many people might know that your business actually exists.

Not many people will know that you actually have a solution to their problem.

This is why it’s great to mix different strategies along with Word of Mouth.

Digital Marketing is definitely one great strategy because it gives you ultimate leverage over exposure.

In fact, with the right strategy, it can provide you with a constant stream of new customers and sales.

On top of that, it can also significantly reduce time & costs.

This is what happened when we worked with one of our clients.

A client who provides B2B services.

Case-Study of A Company that Provides Business-to-Business Services

Through the years, they used traditional strategies to prospect for new leads and customers.

Along with traditional strategies, they also relied on word of mouth.

But soon after, we implemented a digital marketing strategy for them.

In about 4 weeks, they started to see a massive difference.

Here’s the difference they saw illustrated in the table below:

They saw how much leverage they had over exposure.

Because of leverage, there was a spike in the number of prospects they could get.

For the same amount of money spent ($3,000), they are able attract 150% more prospects to them.

Furthermore, they also noticed a huge difference in the Prospect-to-Sale conversion rate.

With the help of digital marketing, they could effectively reach out to people who were genuinely more interested in their services.

This allowed them to truly maximise their time.

Less time could be spent on prospecting & more time talking to people who were more likely to do business with them!

The Bonus That Comes From Digital Marketing

It’s incredibly amazing to see how digital marketing could help massively transform the sales volume for our B2B client.

But what’s even more amazing is what happened when the B2B company served their customers well.

So what started happening?

Because they served their customers well, they started getting referrals and word of mouth.

This is ideally what should happen for any business using digital marketing.

On one hand, you’re able generate a lot more leads & sales, but on the other hand, you’ll be able to quickly expand your network.

This is why digital marketing is a powerful tool that FUELS word of mouth!

Important Things You Must Know Before You Venture into Digital Marketing

No doubt that digital marketing is a must for any business today.

But it’s important to nail down a few things before you venture into it.

If you’re using it to generate leads, then the most important thing is to understand how much you’re willing to spend to get one lead.

This will allow you to know whether you’re on track or not.

We know that a lot of businesses wonder, “How do I know if I’m on the right track with digital marketing?”

Well, if you’re using digital marketing to generate leads, then you first have to know what is the maximum amount of money you can spend to acquire one lead.

In other words, your maximum Cost Per Lead (CPL).

If you don’t know what your maximum CPL then you’re just “feeling” your way through.

You’ll be thinking that the results are bad when things are actually performing.

Or you’ll be thinking that the results are fantastic when it’s actually performing badly.

So, how do you calculate what your maximum CPL is?

You can start by having a clear idea of these 2 things:

1. Knowing what your average sale per customer is
2. Knowing what your average closing ratio is from lead-to-sale for cold prospects

Now with these figures, you can work backwards.

Let’s say your average sale per customer is $500.

And you seem to get 1 sale for every 10 people you meet. Therefore, your closing ratio will be 10%.

Now, with these figures, it means that your revenue per head is $50. ($500 divided by 10 people)

This means you’re able to spend up to $50 because you know you’ll make back $50.

Now you know that your maximum CPL is $50.

So if you’re planning to at least achieve a 2:1 return, then you’ll have to aim for $25.

With that in mind, your maximum CPL will be from $25 to $50.