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Return On InvestmentIf you’re like many wedding and event pros, it was your creativity that brought you into the industry, not your business acumen. To have a successful business, you need both. There are lots of hobbyists who are very creative. Once you decide to sell your products or services, you need to develop your business skills and an understanding of the many ways to measure your success.

How do you measure your business success?
Some wedding pros like to brag about the number of weddings they do. Others will talk about their gross sales. Of course, any good financial advisor or consultant, will tell you that it’s not what you make, it’s what you keep. In the early years of your business, you should be plowing back much of your profits (if you have any) into growing your business. I’ve often heard that a growing business should be investing 10%-15% of their anticipated sales, into their marketing and advertising. Not 10%-15% of their actual sales; the higher sales number that they’re trying to achieve. Then, once you’ve gotten there, you can lower that percentage to maintain your sales.

Don’t shut off the engines
It’s like the analogy of how a pilot needs to have the throttle on full to get the plane off the ground and to get to cruising altitude. Once at cruising altitude, a pilot doesn’t turn off the engines, they back off enough to keep them up there. If they need to climb – maybe to avoid bad weather – they increase the throttle. Similarly, if you want to increase your sales, or you expand into a different market, or a new service/product, you need to increase your marketing/advertising budget, again.

What’s a good ROI?
How do know if you’re getting a good ROI (Return On your Investment)? The short answer is that you have to measure it. In the real world, that’s sometimes easier said than done. While it’s easy to see some online metrics, much of what happens either isn’t tracked or you can’t connect the dots easily. For instance, when someone gets to your website, and sends you an inquiry, that’s great, but where did that lead really come from. I’ve often said, in my presentations, that we don’t get any business ‘from’ our websites. We get business ‘through’ our websites. They had to come ‘from’ somewhere to get to our sites. And, what if they were at three or four other sites before they got to your site? Now, where did that business really come from?

What are you tracking?
Too many wedding and event pros are asking the wrong tracking questions – at the wrong time. For instance, if you’re waiting for a phone, or face-to-face meeting, to ask, “How did you hear about us?”, that’s both the wrong question and the wrong time. You’re too far removed from all of those online clicks. A better question, right on your website contact form, is, “How did you find our website today?” It’s the closest you’ll be to that last click. If you have analytics for your website, it’s not likely to be sophisticated enough to show you the path for that specific customer, before they got to your site. Marketing Guru, Seth Godin, wrote: “The last click someone clicks before they buy something isn’t the moment they made up their mind.” Before they got to your site, they were already thinking about your product, or service. You just can’t see all of those other steps.

The basics of ROI
The difference between an investment, and an expense, is that an investment may return you more than you invested. While an expense gets you only what you paid for (gas, your vehicle, your computer, etc.), to calculate your ROI, you need two numbers: the amount you spent on that investment and the amount you got in return. You can never say whether something is expensive, or inexpensive, based solely on the price. While one professional camera may cost twice as much as another, it may have features that will help a particular photographer make more sales. If those additional sales justify the extra investment, then it’s not expensive; however, the same camera to a different photographer – with no way to monetize that feature – may be considered expensive.

All ROI are not created equal
Of course, not all investments return the same ROI, nor should they. There’s usually no connection between different investments, so comparing their ROI is an imperfect exercise, at best. What we need to do is measure each investment’s ROI, on its own merit. From a business and financial perspective, does this particular investment make sense? The opportunity cost of choosing one investment over another is the potential profit of the investment you didn’t make – if it could be higher than one you’re making now.

But, that too, is an imperfect analytic. In the real world, it gets more complicated. For instance, let’s say you were thinking of doing a particular wedding show, so you decide to move some of your advertising dollars, from something else, to that show. While that seems like a sound decision, in the real world, any couples who would have found you on the ad you dropped, won’t find you at the show, or even on a different website. The couples who choose to attend a particular wedding show, or frequent a particular website, won’t go looking for you elsewhere if they don’t see you. They’ll choose from the vendors they see where they are (on that site, or at the show, etc..). If you have a positive ROI from the ad you’re thinking of dropping (you’re making more in profit, than you’re spending), then you’re going backwards by dropping it. The new investment needs to bring you at least the same profit, or you’re going backwards; but you won’t know – until you try it.

Don’t bet the rent money
What I suggest to my clients, businesses just like yours, is to find additional money to try with the new opportunity. Once you prove that it works, and brings you in a better profit, you can decide if you should drop something else. However, if they’re both bringing in a good profit, even if those profit margins are very different, don’t shoot yourself in the foot (or rather, the bottom line). The only time I’d drop the lower-performing investment, is when the new one is filling your calendar; if it’s not, then you need both.

No one likes a rate increase
Every so often, I’ll have someone complain to me about a rate increase they got from a marketing or advertising platform. Sure, none of us likes to get an increase, but I often present on getting you to raise your rates, charge what you’re worth, and account for your increasing costs. So, it’s kind of hypocritical to raise our rates and complain when another business does it to us. What I always suggest, is to take the emotion out, and look at it rationally. Don’t look at what the rate was, look at what the new rate is, and does the ROI make sense at the new rate.

Final thoughts
One of the most important metrics is profitability. I don’t care how many weddings or events you do. I’m not impressed if you double the number of events you do, but your bottom line doesn’t increase. My goal is to help you feed your family, not your ego. I have several industry clients who’ve cut back on their number of events, so they can concentrate on more profitable business. If your ROI from two different ads, or opportunities, is the same, it’s a coincidence. Before you start jumping from one opportunity to another, take a look at your ROI for each one, not in comparison to the others, but on its own merits.

Need help figuring your ROI, tracking your marketing efforts, or getting better conversion from your ads and website? I’ve helped many businesses, just like yours, profit more. Don’t take my word for it, here’s what they say after consulting with me or having me do sales training:

“OMG- Alan is THE Wedding Guru! I spent two hours on the phone him. He had me outside my comfort zone, for sure! I started using his suggestions that afternoon and It hasn’t even been 24 hours but it’s working!”
Liz Valles, Deja Blu Band, Boulder, CO

“WOW! I just spent 2 hours chatting with Alan Berg on how to improve my wedding photography website conversion rate (visitor to inquiries) and I walked away with a laundry list of actionable, tangible tips, advice, and strategies that I’ll be implementing in the coming days/weeks!”
Henry Chen, Aevitas Wedding Photography, Alhambra, CA

To see how I can help you, and your business, call, text, email, or use the short form on this page to find out more, 732.422.6362, international enquiries 001 732 422 6362

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