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Media Mindset Keys

Here’s the Reality: Every Ad You Run Will NOT Succeed! It’s About Testing Your Ads

But that’s alright, if you get what I’m about to tell you…
You see, TESTING ads first is one of the most important “secret weapon” strategies a tax business owner can learn. Testing any and all of your marketing plans ahead of time (before you “roll it out” altogether) protects you from making BIG mistakes. Testing also helps you secure the life-blood of your business — CASH.
Whatever you do, DON’T think now that you are “armed” with all of this NEW MARKETING KNOWLEDGE every promotion you try is going to hit a “home run!”
That’s crazy. I have promotions where I get bad results and lose money EVERY tax season! But nine times out of 10 it’s with a “test” ad. You see, test ads are just a “sampling” you can try to see if your ad has a chance of working or not.

Note: I use easy to multiply round numbers in my examples to make my points. I obviously want you to charge MUCH more than $100 for your tax services.

If you spend $100 on a small display ad in the newspaper and you get two clients from the ad (or $200 in revenue) that means your test did 2 to 1. (Which means for every dollar you spent in advertising, you received $2 in sales. That’s pretty good.)

So now you might try testing a larger ad. This time you place an ad that costs $500 in the same newspaper, running the same day of the week and “placed” on the page in about the same area as before. (The reason for all of this is to keep as many variables the same as possible to get the truest test you can. They are never “perfect,” but you’ll get a good idea.)

This time you got 10 new clients equaling $1,000 or $500 gross profit (still a 2 to 1 sales to expense ratio.) But with the bigger ad, you got eight more clients, plus you made $400 more bucks on the front end. (You’ll make even more on the back end with more clients now in your database.)

Now that you’ve had two successful tests, you want to do a full page ad. Since the timing is not going to be the same during tax season as the first two successful tests, you’re not sure if you should “shell out” the big bucks! (Full page costs $3,500)

** It’s a good point. Some tax business owners would stay “small” for now and “roll out” full page ads the following tax season.

But for this example, let’s say you go for it. The “full page” test ad (notice even a full page ad can be a test) runs and you get 35 new clients. (Break-even @ $100 per client.) Was the test ad successful? In my opinion, it was the most successful ad of the three. Why? Because I got 35 new clients in my database for FREE. (Costs $3,500; Sales $3,500; Net Profit $0; 35 new clients: no cost)

Now I’ve got 35 new paying clients, and a high percentage will come back to me year after year and refer a certain number of their friends and co-workers to me as well. I’ll make much more profit in the long run with the full page ads running at break-even, than small ads making $500 with a few extra clients.

Don’t be afraid to lose some money every now and then when you are “testing” to find a WINNER. A “winner” could be an ad in that same newspaper. Let’s say you tested the $500 ad and got 30 new clients or $3,000 in sales (6 to 1 sales to ad expense). That’s a winner. I’d go full page ASAP (all things considered) and try to get as close to a 6 to 1 ratio again as possible.

** One thing to remember as you increase the sizes of your test ads. As a general rule: The BIGGER the ad the worse your sales to expense ratio will be. But the good news is, the BIGGER the ad, the better your overall gross profit margins will be.

Every business owner that is a SERIOUS marketer loses money on different types of new promotions they try. Losing money on “new” TEST ads is part of the marketing process! (If you test 10 different media with your ad and seven fail (or get poor results), two barely make money and one is a clear winner, then you hit the jackpot!

Now you can take all the money you were going to spend in 10 different media ads and put 80% in YOUR HOME RUN and the other 20% split up in a re-test of the two ads that barely made money. (You can tweak ’em and see if they can become more profitable.)

But the moral of this story is TEST every place you think makes sense. Once you track your results and find the money-makers, take the majority of your marketing dollars and invest them in the tests where you received GOOD RESULTS!

This is not rocket science. It is a systematic way for you to eliminate the bad and increase the good in your overall marketing plan!

It may be very surprising to you that this is the case, but this is how direct-response marketing is really done: it’s all a numbers game after a while! And that—my accountant friend—means that YOU are set up for success!

 

About “Breaking Even” (This Might Shock You)…

If you are trying to increase your tax business, the main thing you should be concerned with in the beginning is market share. You want to get as many people in your tax office as possible as early in the tax season as possible, too.

We’ve talked about this before. The momentum you build from your client flow is very important. Because we are in “service” business, the more people you have in your business going through your normal “operational funnel” the better. More people refer more new clients. More people means more repeat business the following tax season or throughout the year. More people in your tax office, the better.

So what do we do to get as many people in our office as possible? Of course we are going to advertise our tax business and promote the 3 Ms like we’ve already said. The bigger questions is, “HOW DO YOU KNOW IF YOUR ADVERTISING IS WORKING?”

That might sound like an easy answer. (You know your ad is working when you are making money.) True, but let’s look closer.

Did you know 80% of the businesses in this country LOSE money when they acquire new clients? How can they stay in business you ask? It’s this “thing” called BACK END sales. (I’ll talk about the “back end” until I’m blue in the face, or when everyone in my membership understands and is “cultivating” it properly in their own tax office — whichever comes first!)

Back end sales is everything you sell a client AFTER they make use your services that “first” time. The FIRST sale is always the hardest. After that your marketing to that client gets much easier!

Translate that to the tax preparation industry. We only have ONE sale (for the most part) per year. Can we afford to “lose” money on the front end in order to receive the benefits of the majority of those clients coming back the following year and then multiple years after that, giving us money for ongoing tax services? If you have a big enough bankroll you can.

If you wanted to, you could “BUY” your clients with your advertising. Lose money for a couple of years, but build your client base and enjoy the repeat business and ongoing referrals! You would be profitable in a few years making a lot of money. (That’s one way to do it.)

 

But here’s the way WE did it.

Our goal was to break even on each ad that we’d run. If an ad costs $500, I wanted to bring in five clients to pay for it. The way I looked at it, I JUST GOT FIVE NEW CLIENTS FOR FREE! “They are in my database and now I’m going to help stimulate the Word of Mouth (WOM) Process, and I’m going to send them follow up mailings in the future to make sure they come back, year after year!”

What does the normal tax business owner say after they run an ad that costs $500 and they got only five clients? “I didn’t make any money. I’m not running that ad again!”

It’s too bad. If more tax business owners understood the VALUE of getting NEW clients in their door at NO ADDITIONAL COST to the owner, there would be much more money in the bank accounts of people in the tax profession in this country.

Now don’t get me wrong, I like MAKING MONEY ON THE FRONT END, TOO! If I can get five new clients AND make a few hundred dollars, of course I’d rather go down that road.

 

The “bigger idea” I want to understand is, BREAK-EVEN MEANS FREE CLIENTS!

Chauncey Hutter Jr.

Tax Marketing Expert

Chauncey Hutter, Jr, is a best-selling author and leading marketing consultant and success coach to the tax industry. Mr. Hutter grew his father’s $50,000 per year tax preparation business to a multi-million dollar empire with 24 locations, 400+ employees and over 27,000 tax clients all coming from his marketing campaigns.

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